What you really need to know before you start a business

Posted on 30. Nov, 2009 by Natalie in Entrepreneurs, Inspiration & Motivation

Someone asked me on the weekend exactly what it is that I do. I realised it’s hard to explain to non-entrepreneurs what ‘that’ is.

So I’d like to start the week off with the completely honest views of two successful entrepreneurs who I think summed it up perfectly.

“For those of you who’ve never started a company, let me assure you that it never happens like the pleasant articles you read in business magazines or in case studies.

Founding a company is a sheer act of will and tenacity in the face of immense skepticism from everyone – investors, customers, friends, etc.  You literally have to take your vision of the opportunity and against all rational odds assemble financing and a team to help you execute.

And that’s just to get started.

Next, you have to deal with the daily crisis of product development and acquiring early customers.  And here’s where life gets really interesting, as the reality of product development and customer input collide, the facts change so rapidly that the original well-thought-out business plan becomes irrelevant.

If you can’t manage chaos and uncertainty, if you can’t bias yourself for action and if you wait around for someone else to tell you what to do, then your investors and competitors will make your decisions for you and you will run out of money and your company will die.

Great founders live for these moments.

Steve Blank – Author of `Four Steps to the Epiphany’, former entrepreneur and teacher of entrepreneurship at U.C. Berkeley, Stanford University and the Columbia University/Berkeley.

“One of the unfortunate side effects of all the publicity and hype surrounding startups is the idea that entrepreneurship is a guaranteed path to fame and riches. It isn’t.

Building a startup is incredibly hard, stressful, chaotic and –- more often than not –- results in failure. That doesn’t mean it’s not a worthwhile thing to do, just that it’s not a good way to make money.

A more rational career path for money-making is one that rewards effort, in the form of promotions, increased security, salary and status. Startups, unfortunately, punish effort that doesn’t yield results.

In fact, the biggest source of waste in a startup is building something nobody wants. While in an academic R&D lab, creation for creation’s sake will often get you praise, in a startup, it will often put you out of business.

So why become an entrepreneur instead of developing technology in an R&D lab? Three reasons: change the world, make customers’ lives better and create an organization of lasting value. If you only want to do one of these things, there are better options. But only startups combine all three.

Eric Ries – Name by BusinessWeek 2007 as one of the Best Young Entrepreneurs of Tech

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Tags: Eric Ries, Reality Check, Steve Blank on entrepreneurialism, The Lean Startup