We live in times where we have superstar entrepreneurs which inspires many to jump ship and chase the same glory.
It was this same glory that got me going in the first place too. I read biographies of guys like Branson and Jobs and felt totally inspired to build something spectacular and make the unimaginable imaginable. It wasn’t the money that lured me in, it was the sheer achievement of building a product into a global organisation far greater than any one single person.
What I did not know at the time was how I absolutely lacked critical knowledge and how it slowed me down for the first few years. I never imagined that there were so much I had to learn before I could even start thinking about success. Even if you studied business at university or have an MBA, you are well unprepared for what it takes to be a superstar.
And yes, of course I failed. I failed a few times. I still fail today, but the failures get smaller and smaller and the lessons learnt are priceless and I wouldn’t have wanted it any other way. Sadly you lose relationships when things go South, this would be my only regret. But being ready and geared for the next move is what I live for.
I am intrigued with failure.
I love the way it tests yourself as a person as well your decision making skills and it paints an accurate portrait of who you are dealing with. The thing is, the science of failure is far greater than success. Success has no pattern. No studies of success can ever give you a unifying factor that promises success. There are no patterns, no recipes, no clear paths.
Failure on the other hand is more defined, more precise. Failure is almost always precedented by a critical negligence, some big some much smaller. In most cases the biggest problem lies with the perception of the business or venture. All entrepreneurs view their ventures as businesses. I disagree here. I see a slight difference in perspective that could help entrepreneurs make better decisions, especially as a startup.
You need paying customers
One of my mentors taught me that a business is only a business when you have paying customers, you ad value to all stakeholders and when you solve real problems. If you do not have paying customers there is no business. It is still a venture or a project.
If your venture is yet to have paying customers or clients, it is a project, hence you need to treat it like one.
He even went further to say that only once recurring revenue supersedes your operational expenses, that is when you have a serious business.
If your venture is still a project, do well to call it a project and not a business. This is why if you want to start a business, the first point of call is to get paying customers (or clients). Without that, you don’t have a business.
Even if you raise $1b of funding and you don’t have paying customers, you’re still not a business. Elon Musk started the Boring Company that is building innovative underground transport. They have raised huge amounts of funding for it and are still building the first part of the infrastructure. In fact the first underground tunnel is scheduled to open soon. The Boring Company is still a project, it has no customers.
Until you understand this please do not go and make yourself out to be a business owner, because your focus would be in the wrong place.
The next step in the life of a business is when you start making profits. Right there you shift from a Business to a Profitable Business. Only when you have a profitable business can you boost around about being a successful business owner. If you are not yet making profits your focus should be on what needs to get done in order to become profitable. Turn a product into revenue and revenue into profit, that gives you a real business.
After making profit, there is another level. At this stage, you have the option to become an authority in the market. When the name of your company becomes a verb or common noun in English. You know what I mean. This is legend status. If you lead a startup from day 1 to this status, you have made it to superstardom.
The bottom line here, is that this is a long and serious journey that only a few survive. Don’t get so caught up in valuations and fund raising that you lose sight of the customers that are the ones that bring the revenue. Your customer should be your number one priority as they will buy your product or not, irrespective of how much funds you have raised. The best businesses I have seen are the ones that become businesses before they raise funds. This way, you raise funds for growth and not to start out. Very few investors are willing to invest in day 1 startups, but growth funding, there are plenty investors knocking on the door to sign the cheque.
The path to a successful entrepreneur is a simple but slippery one. If you are really interested in starting up right, give yourself to learning first.
It is more profitable to understand the market than to understand the future.
The best advice I could give you in the context of this article is to get the right mentor for where you are in your life right now and what you need to achieve. This mentor has been where you want to be and can easily navigate you through waters he has mastered.
Almost everyone starts out with a project, but those who remain standing through tough times are those who turned the project into revenue, the revenue into profit, transforming the project into a profitable business.