Note: This is a guest post from our good friend Edmund Lowman. He has built the #1 rated chain of hostels in Thailand along with a bunch of other successful businesses that he’ll tell you about below. He’s also a rock star. Legitimately. He was in Red Jumpsuit Apparatus before becoming an entrepreneur. He knows what’s what–check it!
These days having your own business is all the rage.
Everyone thinks it’s like the cool thing to do and it’s going to make them super-mega-crazy-boy-band-rich…
The truth is that it just may, but if that’s your only logic for jumping into the sea of sharks, unfortunately you are in for a very big surprise.
However, if you are staring at the sea of sharks and thinking to yourself, “Man I really want to punch that shark in the mouth,” or “This is going to be exciting as hell and hopefully I won’t get eaten,” well then my friend you might just have a fighting chance.
Based on my personal experience and experience coaching others, I’ve found that there are typically 7 deadly sins that are sure to sink your startup.
1. Not Validating Your Idea
If I had a dollar for every time that someone has come to me and said:
“Oh man, I have this great idea, I am developing this software that (insert useless task that no one cares about in the first place) it’s going to revolutionize the way people (poop in the streets, or something else useless) and then I would never ever have to work again and I would be able to spend way more time expanding my farmville empire.”
Basically he outlines the probability of having a billion dollar idea, and then how much the amount of effort, results and execution actually effects this valuation.
The thing is this, people do not want to hear about great ideas, they want to see them. (unless you are a really really good salesman, then just telling them might be enough)
However, for the other 99.9% of us people who want to see something, it does not have to be the 100% finished product, but people want to see that you:
A. Believe in it enough to get it going and,
B. That you actually have some results to back up what you are saying about your great idea.
You would be shocked at how far a little effort will go in showing results, so validate and show people you are serious first.
Now believe it or not there are people that have pretty good idea that could potentially be amazing, but they suffer from the inability to act.
Their reasons are typically because they want to make it perfect, the website isn’t ready, their business cards are being printed, they’re just waiting for my LLC papers, the economy is bad… Whatever.
All of these are just excuses and the reality is what is holding them up is FEAR.
Fear is crippling, trust me I know.
Even after I had had a business for several years, when thinking of ideas for a new one I found myself paralyzed by inaction and fear. Eventually I decided to take an online course on “How to start a business” and keep in mind I already owned a multi-million dollar company, but I figured it couldn’t hurt.
The course was Noah Kagan’s Monthly 1k it was AMAZING!
It changed my outlook on business completely and led me to starting Slumber Party Hostel, which is now a million dollar company and growing by the day.
Here’s the thing, what is the absolute worst that could happen?
You quit your job? You can probably get another one.
You fail? Big deal.
You lose some money? Happens to everyone.
Very rarely do people start a business that just kicks ass from the get-go. Its just not how it works. It takes time, persistence and a bit of planning to make it happen.
I look at most businesses, real estate investments, or really anything like this:
- How much is this going to cost me?
- If things go marginally well can I pay myself back in 12 months?
If the answer is yes and it is something I am pumped about I typically do it. Pretty simple.
No fancy charts, graphs, or anything.
3. Over Planning
The evil twin brother of inaction is over planning.
A plan is good, I think.
Actually I cannot really say because I am not really much of a planner.
I am more of a doer. Baring all financial and moral barriers, if something feels right to me and I am excited about it, I will generally do it. Sometimes this is awesome like Kekai Express or Slumber Party Hostel, other times it falls flat on its face like a few of my less noteworthy ventures.
The point is that yeah, some of these failures sucked and were a set back mentally (which is usually the worst part) and financially, but if you pivot set backs the right way they can be a huge step in the right direction–even though it might feel like a kick in the balls.
If you over plan, then the task before you becomes so huge and overwhelming that you more than likely will never take the first real step.
The great irony is that many people create huge, elaborate plans to feel like they are actually accomplishing something when in reality, they are just creating busy work so that they can protect themselves from the potential of failure.
The key is to get out there and do the bare minimum required to get a paying customer. You can always improve your business as you go, but if you spend your whole life planning your master scheme, you’ll never make that first dollar.
4. Financial Mismanagement
Let me start off by saying, I am HORRIBLE with money.
I like to spend and I like to buy.
Thus my success is more out of necessity than anything else. That being said, you need to track where you started and where you are going from the beginning. Financial forecasting and planning is one thing I do plan for.
Yes I know I am totally contradicting what I said above… but hear me out.
In all of my businesses I only focus on one metric and one metric only: customer satisfaction.
That’s it. Mystery solved.
If your customers love you then they are going to stay with you, tell people about you, and never want to leave your side. If you have these kind of customers, then you do not have to worry so much about money, because you know it is always going to be coming in. Furthermore, you can easily plan for the future and forecast your finances, which is HUGE when it comes to running your business.
The worst thing you can do with money is have no idea where it came from, where you spent it, and no idea where you are going to get more.
Personally I use excel for everything. I am sure there are better programs out there, but I like to keep it simple and it works for me.
So if there is one thing you DO plan, let it be your finances.
5. Lack of Structure
There is always this special/painful moment in a startup where you go from a staff of 10 -15 to a staff of 25-30.
Now this may not sound like a huge jump, but it is.
All of a sudden there is a hierarchy and a company culture, people who have been there from the beginning get defensive of their place in the company, and often times those original staff members end up leaving because of some misplaced sense of ownership or importance.
This can be a VERY painful time for startups and can also be crippling if there is no clear structure and process in place for employees to follow and get things done.
Often times it will cause severe bottlenecks, typically with the founders, who generally will have a difficult time relinquishing some of their responsibilities to focus on the big picture.
Any successful business has a well thought out structure, which leads me to our next deadly startup sin:
6. Inability to Replicate
One of the most important lessons I learned at a very young age is that if you plan on hiring staff and you plan on not running the business full time you need to map out every process you do, no matter how insignificant it might be.
McDonald’s has a 20 page document on how to clean bathrooms at their restaurants.
Yeah, you need to be like that.
The more clear you are about how to do things the way that you do them, the easier it is to have someone replicate it later.
The easier you can spell out the detailed steps to replicate, the easier your life will be when you finally decide to start handing off tasks to others.
Without well defined systems and structures, your start up will NEVER grow beyond a small business.
Replication and proper training go hand-in-hand. If you do not develop consistent methods of training new employees that can be later used to train later hires, your organization will eventually fall apart.
Either that, or you or your staff will be consumed with fixing bad employee habits that should have been addressed in their initial training and your growth and productivity will be severely stunted.
7. No Company Ethos
You have to have a spirit and a culture behind your company.
This often stems from your “Why?” Your “Why” is really up to you.
Do you want to get rich? Awesome do it!
Save the spotted Owl? Why not!
Put your name on the side of large building? Absolutely!
Build and organization that enriches your employees as well as customers? Now that’s noble!
The sooner you are honest with yourself about the big “Why” or reason that you are building your company, the sooner you will get there.
My ethos for every company has always been:
Keep the customer happy, NO MATTER WHAT. (unless they are assholes and you do not mind losing them as customers, this important to keep in mind)
Generally speaking the above Ethos has done the following for me:
- Lead my staff to be extremely creative/fun about keeping customers happy
- Made our company culture awesome
- Empowered the staff to make their own problem solving decisions without constant babysitting
Determining a company’s ethos comes down to asking yourself 3 main lines of questioning:
1. What is my company’s creation story?
Throughout history humans have traditionally communicated through stories. People always feel more comfortable once we get to know who someone is and where they came from–or their personal story. The same goes for companies. Educating employees as well as customers about where the company came from generates a greater level of understanding, trust, and bonding.
2. What is my company’s vision?
Once people know where you came from, they want to know where you are going. Having a vision for your business gives it not only a past to reference, but also a future to look forward to in your employee’s minds. Your company’s vision helps complete the overall story and gives employees an understand of “Why” they are coming into work each day. Be sure to tie this vision into you employee’s future because someone who believes in the future of an enterprise is not only more likely to stay with that company, but will also be more inspired to work harder to get there.
3. What are my company’s values?
This adds the human element to a business and is at the core of it’s ethos. It is also what makes a workplace more like a family and less like a large, mechanical machine with people instead of cogs and gears. My companies’ primary values have always been customer satisfaction and this has set the tone for every customer/employee interaction. With this in mind, choose your values wisely.
So are you guilty?
I know I’ve been guilty of a few of these at one time or another:
- Not Validating An Idea First
- Over Planning
- Financial Mismanagement
- Lack of Structure
- Inability to Replicate
- No Company Ethos
Luckily, over planning has never been an issue for me.
Based on my work coaching up-and-coming importers with the StartupBros, I would say that the 2 sins that most people suffer from when they’re first starting out are: 1) Not properly validating their idea–and 2) plain old Inaction.
People get so spooked at the idea of failing–whether unconsciously or not–that they don’t even get the experience of messing up on sins 4-7.
Failing is good. Failing is real world education, as long as you are aware enough to learn from the experience.
So get out there, take action, validate your idea and watch your finances. If you develop a customer-oriented company ethos, your startup just may survive to the point where you can build a replicable structure.
All of this starts with that first step. Move swiftly.