Startup & Investment Considerations

By Patrick Driessen

“High achievers spot rich opportunities swiftly, make big decisions quickly and move into action immediately. Follow these principles and you can make your dreams come true!” - Robert H. Schuller

"Success isn't a result of spontaneous combustion. You must set yourself on fire!” - Andrew H. Glasow 

On a regular basis I receive questions from fellow entrepreneurs if I can please help them with their startup, early-stage venture, or later-stage venture. Often their request for advice and support is based on their need for fund raising, to get through the startup phase or whether they should start their business or not.  
To help many emerging entrepreneurs in these area's, I'll share many of my insights, lessons learned, tips and experience; allowing you to make the best startup and investment considerations!

Below you'll find an overview of insights, questions and actions allowing you to make the best considerations whether you should start or expand your new/existing venture or not and as a next step to allow somebody else to consider whether to invest in your venture or not. It's a mixture of qualifying questions and actions which I use myself as entrepreneur and angel investor, mixed with the investment considerations from fellow entrepreneur Tim Davis.

STEP 1: The Investment Considerations (TIC) for your New Venture

Getting Investor Ready

The questions below will help you to define the required actions, answers, stories, strategies and next steps, giving input to all the paperwork required to convince potential investors. Most of this information will be used for the creation and optimisation of the following documents:

• 1-page Investment Summary
• Information Memorandum 
• 2-10 page Business Plan 
• Draft Shareholder Agreement 
• Investment Term Sheet.

Go/No-Go Decision

The answers to the questions below will allow you to identify and define all the possible roadblocks and key challenges in getting your new business venture up and running. If you list these challenges and define strategies and actions on how to prevent and/or overcome them, you have the ideal input to make a GO or NO-GO decision. For example:

To successfully start and grow our new business venture, these are the key challenges:

• Secure $50-150k in seed funding and potentially $500k in a Series-A round; 
• Find and hire an exceptional CFO and COO within the first 6-12 months; 
• Allocate sufficient working capital to bridge at least 9 months to get to break-even; 
• Sign an exclusivity agreement with X strategic partners; 
• Protect our brand name and other IP by xxxx before xx-xx-2011; 
• Create complete beta version of our new product/service within xx weeks; 
• Etc.

If you can positively overcome these challenges, including creating a Plan B(ackup) for any one of them (always expect the unexpected...), than you could decide to give it a GO, otherwise it’s back to your drawing board or give it a NO-GO and walk away from it.

TIC - Company Product or Service

• What is the Clarity of Purpose: Summarize the company's business on the back of a business card.
• What's new about what you're doing? What are people forced to do now because what you plan to make doesn't exist yet?
• How did you come up with your business idea?
• What is the Growth Opportunity?
• What is your Competitive Advantage?
• What can you offer that others cannot?
• What are the Customer Benefits? (both performance and psychological benefits?)
• Why would ‘you’ use your service? Why would others?
• Why would ‘you’ pay for your service? Why would others?
• What stage of development are you in?
• How will you make money?
• What is the social proof for your venture/business idea? E.g. are any "known" people from the industry involved in your company? If so, what is their role and what makes the person(s) impressive?
• Is the new product or service ready? Demo? If not, what is the time-line for development and market launch?
• Do you have any ideas/products/services you’d consider patentable?

TIC - Services and/or Product Strategy

• What is the “value equation”? That is, Customer Value = Seriousness of Current State + Benefits of Proposed Future State -/- Cost of Solution.
• What is the product or service ‘really and simply’; in one statement or word?
• How will you improve your product or service?
• How will these improvements allow your company to expand into other markets?
• What is your “dream vision” of the product or service? That is, if I gave you a bottomless pit of money – what would you do? Why?
• Is there any ‘uniqueness’ in terms of IP, etc?

TIC - Market

• What is your target market?
• What do you understand about your market that other companies in it just don't get?
• What is the “bottom up” market view  (i.e. entry level, segments, industry, country, global, etc.)
• What is the “top down” market view? (i.e. above in reverse)
• What is the current market state?
• Who are the current market leaders (if any)?
• What will differentiate you from the market leaders?
• What is the market size and opportunity?
• How much of the market are you wanting to penetrate?
• How are you taking market share off existing players in this market?
• How is your industry changing and what is the impact on the niche market(s) you focus on?
• What are your “expansion axises”? I.e. what markets do you want to expand into?
• What are the barriers to market entry? What are some mitigating factors?
• How are you going to “increase” market share?
• How many target audiences are there within your target market(s)?
• What are your key target audience(s) per product/service, per country, region, etc.)?
• What is/will be the average spending on a service/product in your target market(s)?
• How can you increase the share of wallet?
• Are there any organisations or competitors in the market you’d consider to acquire to accelerate your growth?

TIC - Risks

• What are the risks? Now, what are the real risks?
• What are future and/or potential risks?
• Operational Risks?
• Human Capital and Retention Risks?
• Financial Risks?
• Legal Risks?
• Political Risks?
• Foreign Exchange Risks? Etc.
• Which risks are Systematic (undiversfiable) and which are Unsystematic (diversifiable)?
• What are your ‘personal risks’ in the business? Are you taking risks? If not, why should investors invest?
• What are your teams ‘personal risks’?

TIC - Management

• What is your level of experience? 
• If it’s limited, what are you doing about it to reduce investor risk?
• What are your qualifications?
• What is your previous business or operational experience?
• Who is in the team? What are their levels of experience/qualifications/operational experience, etc.?
• Is the team well diversified? 
• Does your team cover off a broad range of business disciplines? (i.e. financial, legal, marketing, sales, etc.)
• What are your projected salaries? Why? Are they too high/low? Are they realistic?
• Do you have any previous start-up experience? If so, what was this business? Did you sell it? Was the product/market/etc.?
• Which key players have you lined up or identified to help your grow the business?

TIC - Sales & Marketing

• What is your marketing strategy?
• What is the forecasted marketing spend?
• The ‘what, where, why, how, who’ of your branding and promotion?
• What is your sales strategy?
• Direct sales vs. channel sales?
• What will be the cost of sales to acquire a new client?
• How will pricing fluctuate and is it market sensitive? What factors make it so? How to mitigate?
• What is your projected growth?

TIC - Financials

• What are your financials (real and/or projected)? I.e. Burn Rates, Gross Margins, Earnings, Cash Flow, Debts, Break-even, etc.
• What are your (forecasted) startup costs?

TIC - Investments

• What is your investment? Financial, sweat equity, etc.
• What is the realistic valuation of the business?
• What is the Capital & Legal structure of the business?
• Why do you need investment?
• What will you use the investment for?
• Why should investors choose ‘you’ over ‘another’?
• What % equity are you offering?
• What is your ‘forecasted’ ROI (return on investment)? 
• How long will you take to pay the investment back?
• Is your Risk vs. Return fair?
• How can the investors help without injecting money?

TIC - Random Questions

• What is the problem you are solving? I know of other services in the same space. What’s the differentiator?
• Competitor ABC is the market leader in this field by X% margin. How are you going to compete against them?
• Is your market size really reasonable?
• Where did you pull the data for your projected growth and revenue streams? Sales etc?
• Are your direct sales vs. channel sales strategies sound? Why not focus on just direct or just channel?
• I want to know more about how you are going to market? What are some of your other strategies?
• Is there any defensible IP? What stage is this at?
• How will people associate your product with the industry segment?
• I want to know more about you and your team? Tell me.
• I have had 2 other people pitch me a similar idea – why ‘you’ and not ‘them’?
• Do you think the amount you are asking for is reasonable? Can you do more with less? Can you do less with more?
• What are the largest obstacles you foresee in order to secure a greater market share?
• You investment terms aren’t really reasonable? X% for %X million at % revenue – is this realistic?

STEP 2: Additional Actions & Next Steps to Become Investor Ready

• Have / get signed official contracts and agreements in place for every possible partnership, alliance, employment, etc. 
• Create a compelling website with at least 5 pages (about, services, team, partners) to run a beta-test pilot case with. 
• Buy domain names for the company (e.g. com/net/org/tv/eu).
• Get a signed Letter-of-Intent (LOI) in place with future business partners, clients, etc. 
• Design of new corporate structure & legal entity.
• Get agreements with suppliers, manufacturers and service vendors.
• Create a risk management matrix for all business areas. 
• Create biographies for all exec team members. 
• Create a work-flow overview for all business processes. 
• Create pictures to describe the commercial / production process. 
• Gather, analyse and consolidate all relevant market research. 
• Gather and select the best and most relevant quotes about the market by industry analysts (e.g. Forrester, Gartner, Frost & Sullivan). 
• Create a detailed financial plan for the startup phase 3-12 months and a high level / solid 3 - 5 year financial forecast. 
• Create a video demo & presentation à select best producer & editor or DIY and create a storyboard for video shoot. 
• Apply for a brand name and business name Trade Mark. 
• Select the best candidates for the Advisory Board. 
• Create a clear and compelling Unique Value Proposition. 
• Describe various use cases. 
• Create a demo in which a live use case will be demonstrated (i.e. how potential clients will buy, use and experience your product or service).

STEP 3: Get Ready for Due Diligence

Various categories with information which needs to be presented/handed over to a potential investor for their due diligence process:

Financial

• Detailed P&L and balance sheet;
• Ensuring the current accounts are in order;
• There are no unaccounted liabilities;
• Debtors and creditors are under control;
• Systems are in place to deal with all management and compliance obligations;
• Sound processes are or will be in place for authorising payments;
• Corporate governance standards, etc.

Legal

• Reviewing all current and relevant past contracts (commercial; employment);
• Intellectual property protection (patents; trademarks);
• Corporate structures (providing clarity and simplicity for incoming investors);
• Shareholder agreements (terms and conditions that may impact incoming investors);
• Supplier and customer agreements;
• Trading terms and condition, etc.

Commercial

• Unique Value Proposition;
• Detailed Go-To-Market Strategy;
• Business plan including future development roadmaps;
• Overview with new business initiatives;
• Marketing strategies, cost-of-sales per target client, sales/profit forecasts;
• HR structures and resource requirements;
• SWOT analyses;
• Supplier/customer interviews to establish reputational bona fides and quality of the core value propositions;
• Disaster recovery plans, etc.

Technical

• Blueprint of the proposed technical architecture;
• Infrastructure / technical architecture review & audits;
• Technical details of all applications, websites, products and services, which will need to be created;
• Specifications of all technical assets which will be required to enable the go-to-market strategy.

Management

• Biographies of all the founders and/or management team members;
• Resumes of the key team members;
• References and endorsements of the key team members;
• Employment agreements and shareholder agreements of founders and/or management team.

As the quality of the management will be your most important key to success AND will be the most important selection criteria an investor uses, you might want to include additional content along the following lines:

• Why and in what way(s) you and your founders are exceptional and what kind of exceptional things you are capable of?
• What is the experience of each founder in starting up a new business and/or leading a business?
• How long have the founders known one another and how did you meet?
• How would you describe the relationship between each of the founders (e.g. close friends, best friends, former colleagues, etc.)?
• For each of the founders: please describe at what age did they start earning money.
• If the founders have worked together in the past; please explain about one or two challenging cases in which your co-operation led to joined success and/or victory.
• Share the management and leadership experience of each of the founders and include the number of direct reports and indirect reports they have had (if any).
• What has your team (including the founders) accomplished in the past that would make investors and/or potential clients think you will be successful?
• Write 2-4 paragraphs on why you want to be a (leading) entrepreneur.

Note: The above points are all insightful suggestions and it might not be necessary to adopt all of them to succeed in your fund raising case.

Tip: As most investors get bombarded by many investment opportunities, it’s their challenge to select the most exceptional and most potential ones. So.... dare to stand out and dare to be different, but don’t overdo it or take too much risk!

STEP 4: Accelerate!

If you’ve read all of the above and thought “Yes, I can do all of this”, than it’s time to accelerate the process!

In the olden days it used to be costly and time consuming to create a beta version of your new venture, but thanks to social media, crowd sourcing, offshore development and advanced technology; it’s not only simple and fast to create the basics for your new venture(s), it’s also very affordable... as long as you know where to go and how to get what you need in the best possible way. A few tips:

• Get your new logo, website design and/or mobile app design via crowd-source platforms such as: www.99designs.com, www.DesignCrowd.com or www.CrowdSpring.com. If you just start with mock-ups of your new website/application than you can create a compelling story-board to cover the visual side of the story you’ll tell them.
• Get your website, mobile app and other tech stuff developed using a market place with quality control process; allowing you to manage the outsourced development for the lowest possible cost. You can use platforms such as: www.Freelancer.com, www.eLance.com,  www.Odesk.com, www.RentaCoder.com or www.Guru.com.
• There are various apps on the market, which will allow you to create, cut and edit your own video, without the need of hiring a professional video recording expert. Especially if you have an iPhone4 you can DIY the video editing. Alternatively it often pays off to spend a few extra bucks on an expert. E.g. I was happy to spent $500 on a full day of recording + editing because the 2 minute video the expert had created had a massive impact on anyone who saw it!
• Get lessons learned from fellow entrepreneurs via the various startup- and business websites and communities such as: www.VentureBeat.com, www.StartupLessonsLearned.com, www.Kauffman.org, www.Inc.com, www.StartupNation.com, www.BusinessInsider.com or via www.YouTube.com.
• Use proven funding platforms to source and select the best potential investors such as: www.AngelSoft.net, www.AngelList.com, or www.TheFunded.com.

I hope these insights will enable you to start and fund your business venture faster and more successfully, thus allowing you to accelerate your business growth, while mitigating operational & financial risks.

"Entrepreneurship is living a few years of your life like most people won't, so that you can spend the rest of your life like most people can't." - Anonymous

Warm regards & success,

Patrick Driessen

How To Become An Entrepreneurial Millionaire

By Jason Baptiste

"I move forward the only direction. Can't be scared to fail in search of perfection!" - Jay-Z, On To The Next One



Some key things to focus on to become an entrepreneurial millionaire and/or a millionair entrepreneur within a short time frame:



Market opportunity: A million dollars is not a lot in the grand scheme of things, but it certainly is a lot if the market opportunity is not large enough. Even if you put Bill Gates and Steve Jobs as founders in a new venture with a total market size of 10 million, there is no way they could become too wealthy without completely changing the business (ie-failing).



Inequality of information: Find a place where you know something that many undervalue. Having this inequality of information can give you, your first piece of leverage.



Leverage skills you know: You can go into new fields such as say Finance, but make sure you’re leveraging something you already know such as technology and/or product. Someone wanted to start a documentary with me. I said that would be fun, but it would be my first documentary regardless of what happened. There was a glass ceiling due to that. If I do something leveraging a skill I know, I’m already ahead of the game.



Look in obscure places: We’re often fascinated with the shiny things in the internet industry. Many overlook the obscure and unsexy. Don’t make that mistake. If your goal has primarily monetary motivations, look at the unsexy. One example would be email newsletters, which I’ve profiled before.



Surround yourself with smart people: Smart people whom are successful usually got there by doing the same and have an innate desire to help those do the same. It’s the ecosystem that’s currently happening with the PayPal mafia and can be traced all the way back to Fairchild semiconductor.



Charge for something: Building a consumer property dependent upon advertising has easily made many millionaires, but it isn’t the surest path. It takes a lot of time and scale, which due to cash flow issues will require large outside investment probably before you are a millionaire. Build something that you can charge for. That’s how business has worked for thousands of years prior to the 1990s. Make something, charge for it, and repeat it. David Heinemeier Hansson explains this really well at Startup School '08.



Information products are valuable: E-Books, screen casts, and anything that can teach others to be good at something is a very lucrative business. Look at guys like Peepcode… they’re killing it. There are also things like Parrot Secrets, which make 400k a year. Bonus points if the information helps a person make money (directly or indirectly) or improves their self image. FYI: this doesn’t mean sell snake oil eBooks. That may get you a somewhere in the 5 figures, but word will spread that your shit smells.



Your primary metric shouldn’t be dollars: If you’re going after a big enough market and charging a reasonable amount, you can hit a million dollars. Focus on growth, customer acquisition costs, lifetime value of the customer, and churn.



Get as many distribution channels as possible: There is some weird sense, that if you build something they will just come. That a few “like” + retweet buttons and emails to editor@techcrunch.com will make your traffic explode + grow consistently. It fucking won’t. Get as many distribution channels as possible. Each one by itself may not be large, but if you have many it starts to add up. It also diversifies your risk. If you’re a 100% SEO play, you’re playing a dangerous game. You’re fully dependent upon someone else’s rules. If Google bans you, you will be done. You could easily replace the SEO example with: App store, Facebook, etc.



Go with your gut and do not care about fameballing: Go with what your gut says, regardless of how it might look to the rest of the world. Too often we (I) get lost in caring about what people think. It usually leads to a wrong decision. Don’t worry about becoming internet famous or appearing on the major blogs. Fame is fleeting in the traditional sense. Become famous with your customers. They’re the ones that truly matter. What they think matters and they will ultimately put their money where their mouth is.



Be an unrelenting machine: Brick walls are there to show you how bad you want something. Commit to your goals and do not waver from them a one bit regardless of what else is there. I took this approach to losing weight and fitness. I have not missed a single 5k run in over a year. It did not matter if I had not slept for two days, travelling across the country, or whatever else. If your goal is to become a millionaire, you need to be an unrelenting machine that does not let emotions make you give up or stop. You either get it done with 100% commitment or you don’t. Be a machine!



If it’s a mass market “trend” that’s all over the news, it’s too late: This means the barriers to entry are usually too high at this point to have the greatest possible chance of success. Sure you could still make a lot of money in something like the app store or the Facebook platform, but the chances are significantly less than they were in the summer of 08 or spring of 2007. You can always revisit past trends though. Peter Cooper and I clarified some of the semantics about what is a trend over here.



If you do focus on a dollar amount, focus on the first $10,000: This usually means you’ve found some repeatable process / minimal traction. i.e.- if you’re selling a $100 product, you’ve already encountered 100 people who have paid you. From here you can scale up. It’s also a lot easier to take in when you’re looking at numbers. Making 1 million seems hard, but making $10,000 doesn’t seem so hard, right?



Be a master of information: Many think it might be wasteful that I spent so much time on newsyc or read so many tech information sites. It’s not; it’s what gives me an edge. I feel engulfed.



Get out and be social: Even if you’re an introvert, being around people will give you energy. I’m at my worst when I’m isolated from people and at my best when I’ve at least spent some time with close friends (usually who I don’t know from business.)



Make waves, don’t ride them: There was a famous talk Jawed Karim gave from YouTube. He described the factors that made YouTube take off in terms of secondary/enabling technologies. I think they included (1- broadband in the home 2- emergence of flash, so no codes required 3- proliferation of digital cameras 4- cheap hosting 5- one click upload 6- ability to share embed). Find those small pieces and put them together to make the wave. That’s what YouTube did. The other guys really just rode the wave they created (which is okay).



Say no way more than you say yes: I bet almost every web entrepreneur has encountered this: You demo your product / explain what you’re doing and someone suggests that you do “X feature/idea”. X is a really good idea and maybe even fits in with what you’re doing, but it would take you SO FAR off the path you’re on. If you implemented X it would take a ton of time and morph what you’re doing. It’s also really hard to say no when it comes from someone well respected like a VC or famous entrepreneur. I mean how the fuck could they be wrong? Hell, they might even write me a check if I do what they say!!! Don’t fall for that trap. Instead write the feedback down somewhere as one single data point to consider amongst others. If that same piece of feedback keeps coming up AND it fits within the guidelines of your vision, then you should consider it more seriously. Weight suggestions from paying customers a bit more, since their vote is weighted by dollars.



Be so good they can’t ignore you: I first heard this quote from Marc Andreessen, but he stole it from Steve Martin. Just be so good with what you do that you can’t be ignored. You can surely get away with a boring product with no soul, but being so good you can’t ignore is much more powerful.



Always keep your door/inbox open: You never know who is going to walk through your door + contact you. Serendipity is a beautiful thing. At one point Bill Gates was just a random college kid calling an Albuquerque computer company.



Give yourself every opportunity you can: I use this as a reason why starting a company in Silicon Valley when it comes to tech is a good idea. You can succeed anywhere in the world, but you certainly have a better chance in the valley. You should give yourself every opportunity possible, especially as an entrepreneur where every advantage counts.



Give yourself credit: This is the thing I do the least of and I’m trying to work on it. What may seem simple + not that revolutionary to anyone ahead of the curve can usually be pure wizardry to the general public, whom is often your customer. Give yourself more credit.



Stick with it: Don’t give up too fast. Being broke and not making any money sucks + can often make you think nothing will ever work. Don’t quit when you’re down. If this was easy then everyone would be a millionaire and being a millionaire wouldn’t be anything special. Certainly learn from your mistakes + pivot, but don’t quit just because it didn’t work right away.



Make the illiquid, liquid: I realized this after talking to a friend who helps trade illiquid real estate securities. A bank may have hundreds of millions of assets, but they’re actually worth substantially less if they cannot be moved. If you can help people make something that is illiquid, liquid they will pay you a great deal of money. Giving you a 20-30% cut is worth it, when the opposite is making no money at all.



Productize a service: If you can make what might normally be considered a service into a scalable, repeatable, and efficient process that makes it seem like a product you can make a good amount of money. In some ways, I feel this is what Michael Dell did with DELL in the early days. Putting together a computer is essentially a service, but he put together a streamlined method of doing things that it really turned it into a product. On a much smaller scale, PSD2XHTML services did this. It’s a service, but the end result + what you pay for really feels like a product.



Look for something that is required or subsidized by law: Motorists are required to have insurance, public companies have to go through Sarbanes Oxley Act legislation, doctors get tens of thousands of dollars for EHR systems, etc. Look for something that is required by law and capitalize on that. Usually things that are required and/or subsidized by law are mind numbing with complexities. Find a way to simplify that process.



Make sure you’re robbing a bank: When Willie Sutton was asked why he robbed banks, he said: "because that’s where the money is!". Make sure whatever you’re going after is where the money actually is; i.e. a customer that will pay you. Consumer markets are tough, especially with web based products. People expect everything to be free. Businesses are usually your best bet.



Don’t be emotional: Emotions can let you make stupid decisions. It can make you not walk away because you’re attached to something. Most importantly it will lead to indecision and a loss of confidence. Put your emotions into your product or save them for your lover, family, friends, etc.



Don’t leave things up to chance: People feel that things will just work out due to carpe diem. They usually don’t! People can be unreliable, deals can fall through, and shit will always happen. Prepare for multiple scenarios and contingencies. You can mitigate this by working with smart AND reliable people.



Raise revenue, not funding: Everyone is always so damn fixated on getting funded because it’s the cool thing to do. Focus on getting people to pay you at first and then scale things outwards with funding IF and WHEN you need it. If your goal is to make a million dollars in three years, funding probably isn’t the way to go. VCs won’t let you take a salary of ~300k per year. Selling a company in <3 style="font-weight: bold;">Don’t get comfortable: You will probably get comfortable somewhere around 200k, maybe less or more, but it will certainly be before 1 million dollars. If you get comfortable you start getting off balance and having the hunger to move forward. Reward yourself a little bit, but live as frugally as possible. I have friends who have made some okay money, but blow it all away on stupid shit because they got comfortable.



Look for those who are comfortable: Who is comfortable in a certain industry? Go in and knock them off their hammock so they spill their mojitos on themselves. This can also be considered stagnation. Industries often mature and people get comfortable keeping the status quo. Stagnation is the mid-life crisis for a former trend. This is usually a good point to come in with something.



Don’t skimp on the important things: When it comes to things that need to be reliable such as infrastructure, delivery, or even your own personal tech equipment – don’t skimp out. These are the tools that ensure reliability and your product being delivered. You can skimp on the office space, the desks, coach airfare, budget motel in Mountain View, etc.



Companies spend just as much or more on services as they do on software: Paying for the ERP, CRM, or custom built system is just the first step. There’s the maintenance, training, and service contracts.



Keep the momentum going: I’ve had projects where things were moving a million miles an hour, then BOOM, they just lost a lot of momentum. That is the worst possible thing you can have happen. Keep moving the ball every day!



Listen (or read the transcriptions of) to every Mixergy interview you can: Most of my audience will probably know about Mixergy, but I can’t let a single reader leave without making sure they know it exists. It is by far the most practical resource on the Internet if your goal is to do well. Andrew has interviewed entrepreneurs from all walks of life with varying levels of success. Most of them had real business models and bootstrapped. Most importantly, he finds out what specifically led to their success. Link to Mixergy.



Last, but not least: learn how to filter: I just wrote upwards of 2,200 words. Some of the points are even contradictorily. Start adding in other sources of information and you will feel like you’re being pulled in a five million directions. You then become indecisive. Take in information and then filter the good bits while synthesizing them to be a part of your overall plan. What works for person A doesn’t always work for person B.



"Entrepreneurs average 3.8 failures before a final success. What sets the successful ones apart is their amazing persistence. There are a lot of people out there with good and marketable ideas, but pure entrepreneurial types almost never accept defeat!" - Lisa M. Amos



Make this a Happy & Fruitful day......unless you’ve made other plans!



Thanks, warm regards & success,





Patrick

Success Ingredients For Emerging Entrepreneurs

By Patrick Driessen

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary!” – Steve Jobs

Having started, run and lead various companies as an entrepreneur since I was 15 years old, I have learned many things about being an entrepreneur; often the hard way…. Some of my own business ventures were very successful, some unsuccessful, and one even resulted in my personal bankruptcy (at the age of 21), however all of them made me very rich and happy! They made me rich and happy in enriched knowledge and experience; my failures and success allowed me to learn more, build new valuable relationships, get new ideas, get more insights & inspiration and apply my lessons learned to become more successful!

A lot has been said, written and published about the key qualities of successful entrepreneurs: e.g. passion, creativity, leadership, vision, self-confidence, relationship building, innovation, organization skills, communication and coordination skills. Based on my own experience I would like to share and highlight some other key qualities and insights that will help an entrepreneur to succeed. Just ask yourself the following questions…

1. What is your personal mission statement in life?

As Stephen Covey wrote in his popular book “The Seven Habits of Highly Effective People”, the second habit he talks about is “Begin with the End In Mind”. He recommends formulating a “personal vision statement” to document one’s perception of one’s own vision in life.

What do you want to accomplish in your life? One effective way to write your personal mission statement is to visualize the day when you die. What do you want your loved ones and friends to say and remember about you? Another approach is to write your own obituary.

Without a clear personal mission statement, you will quickly lose focus and direction in your business. Without a personal mission statement, you won’t be able to find a passion or desire for success.

As one of my fellow coaches and friend Denis Gianoutsos likes to state: “There are two important days in your life: the day you were born and the day you knew why!” So what do you want your life to be about? What’s your mission and what’s the big picture?

For more insights into your positive self-direction, please see: ‘This is Your Wake Up Call!’

2. Are you self-motivated?

Perhaps one of the most crucial qualities for people who are self-employed to succeed. Without self-motivation, you will always find yourself putting things off. You won’t be able to accomplish anything as there is no one there to motivate you or watch over your shoulder when you’re your own boss. So if you are not a self-motivated kind of person, working for yourself or being an entrepreneur is definitely a risky business for you. You can mitigate this risk: get a business partner, get a coach & mentor or ask a close friend to help and stimulate to motivate yourself!

If you think you are not self-motivated enough, make it part of your self-development plan: coach yourself to improve in self-motivation! Success guaranteed!

3. Are you persistent?

Understand that there is no “instant gratification” when you’re running your own business. You won’t get a pay check every month like you do in a 9 to 5 job. Initially, you may need to work very hard for little reward.

If you’re not persistent or don’t fully believe in yourself and in your business, you will find yourself giving up very quickly. Of course, it is possible to earn good money by running your own business, but you need to remember that it will take hard work, time and persistence to achieve true success and happiness!

Like Sir Winston Churchill said: “Never, Never, Never Ever Give Up!” So whenever you fail or make a mistake; take the lessons learned, get back on your feet to apply them and use your enriched experience to succeed faster and better!

4. Are you financially responsible?

A very important quality for all business owners. When you’re your own boss, you’re a CEO, accountant and finance manager. You’re fully responsible for managing and controlling your business budget. When you start making profits, you will need to know how to manage it wisely. Often times, you will want to put a portion of your profit back into your business to help it grow and expand further. Or you want to build up a solid cash position to finance a possible acquisition.

Successful entrepreneurs actively manage their P&L (Profit & Loss) balance sheet, and especially their cash position! They focus on two things to improve their financial performance:

A) Increasing their profits. This is only possible through either:

• Increasing revenue, or
• Cutting costs and cost avoidance.

B) Growing their business. This is only possible through the following 4 methods:

• Increasing acquisition of the right type of clients (through organic growth or M&A)
• Increasing margins
• Increasing the frequency of purchase of your clients
• Reducing the attrition of the right types of clients.

5. Are you hungry for success?

If you want to be an entrepreneur, you have to think and behave like one! You have to think and act as a leader, as a CEO and as a warrior! Understand that business is not the same as a hobby where you can take it lightly. If you treat your business like a hobby, you will never be able to achieve true success. A business needs to be worked at seriously and professionally, you can’t allow personal things to get into your business. Remember what the headline in Donald Trump’s Apprentice show says? “It’s Not Personal – It’s Just Business!”.

6. Do you have the required health and condition?

Being the founder of a startup business means that you will have to put most – if not all – of your time and energy in your new venture to make sure you’ll succeed. It’s like top sport and playing in the Premier League. Only the founders with a good health and great condition will make it to the finish and only the ones with the best health and balanced condition will be able to win the race. As a founder of a startup you will need to turn yourself into a top-performer; a top athlete!

If you are still smoking; based on my own experience I can advise you to give it up before you start your startup!

Become your own health coach and build up a regular exercise schedule, practice meditation and make sure you’ll develop an on-going health & wellbeing program for yourself. If you need someone else to help you do it, make sure you build up a trusted (health) relationship at an early stage, because he or she will become your secret weapon in assisting you to overcome all kinds of mental and physical challenges.

If at present you are on a somewhat unhealthy diet, you’d better change your nutrition intake now, because what you eat and what you drink has the biggest impact on your level of energy. While working your butt of on your new venture, it will often be challenging for you to eat healthy and stay off junk food. Make it easy for yourself to stay off high GI food, which will negatively impact your energy levels and your overall health.

Here are some health and nutrition tips based on working with many startups:

• Eat at set times; no matter how busy your daily schedule is, make sure you feed your engine at set times. If not, it might negatively impact your energy levels, your biorhythm, your stomach and your metabolism.
• Practice meditation as it will allow you to rapidly relax your body and mind, re-energise, and re-focus.
• Food: start your day with a health breakfast full of fibres (tip: muesli). Make a special and long-term deal with a local restaurant or caterer at which you can pick up a daily fresh cooked dinner for approximately $7-$10 per meal.
• Snacks: have a bowl with fresh fruit in your office, which you fill up weekly and buy a big jar which you fill up with healthy mixed peanuts (including almonds and walnuts), which do not only provide you with new energy; they are also good for your brain and heart function.
• Drinks: try to limit your coffee intake to 3 cups a day, drink green tea, drink plenty of water (>2 litres) and limit the intake of alcohol.

7. Can you become the king or queen of sleep?

Getting enough sleep often is a neglected challenge for emerging entrepreneurs. It can also be a hidden risk, as sleep greatly impacts your health and your energy levels. Becoming a sleeping expert will help you to succeed in your entrepreneurial challenges. Here are some insights and tips based on my own experience:

• Sleep enough and sleep a consistent number of hours. What I never expected is that my lack of sleep and irregular sleeping pattern resulted in huge weight gain.... I became pretty fat, although I was exercising and eating healthy... When I did some research I found the scientific evidence that poor sleep results in weight gain....
• Power naps: to cope with an irregular sleep pattern and often a lack of sleep, make sure you practice power naps; it will allow you to quickly revive and refill with new energy.
• Practice day dreaming! It is proven that a type of dreamy sleep that occurs more frequently in the early morning is important for solving tough problems that cannot be easily answered during the day.

8. Do you have enough supportive friends & family?

Being an entrepreneur often means having to deal with tough personal, financial and emotional challenges. Often almost everyone around you will have doubts about your plans, your vision or your growth strategy. Will it stop you or de-motivate you?

A lot of people think that startups and being an entrepreneur suck, and they are always happy to explain to you why! Other people will tell you that you are ‘crazy’ to be an entrepreneur instead of working as employee for a well-established organisation, which offers you security, a compelling salary, bonuses, 20+ holidays, etc. Will it stop you or de-motivate you?

Often you will make mistakes, sometimes having a big impact on your business, your team, your financial position and… on your emotions! Will it stop you or de-motivate you?

Being an entrepreneur sometimes means being very lonely. It’s tough, it’s challenging and for many it’s the best thing ever…. But…not always! For all those very tough and lonely moments in which you could get depressed you will need a small group of close friends and family members who will help you get through these difficult moments. They will kick your ass when you will need it the most! Who are they? How can you get their full support and how do you make them part of your entrepreneurial journey, so you can rely on them when you really need to?

9. Can you create enough sources of funding?

Starting, building up and expanding your own business not only requires time, lots of energy, experience, knowledge, an exceptional team, strategic partners, many supporters and paying clients; it usually also requires lots of money!

In the startup phase you will need to bootstrap and fund yourself and your new venture with your savings, and possibly cash flow from your side job(s) or day job. Once you’re a fulltime entrepreneur (which is the best way to kick-start your venture), you will soon realise that you will need additional funding. Maxing out credit cards, taking a second mortgage or selling some of your assets are all viable options, but maybe you will need even more money to fund the growth of your business. The big question is: before and while starting your new business, have you created enough access options to funding sources in case you require more money?

Have you got access to trustworthy friends and/or family members who are willing to lend you money or take an equity stake in your business? Have you got access to angel investors and have you been actively building a relationship with them? Do you personally know the loans and/or branch manager at your bank? Do you know someone who can introduce you to an outstanding venture capitalist? Have you built up a valuable relationship with some of your clients and are they willing and able to help fund some of your growth without requiring an equity stake?

All practical options, which usually only will work successfully for you if you have planned for it, invested time and passion in it and took enough action on it.

10. Are you a people leader?

Building up a new venture is like a rat race; only the best, smartest and fastest will win! It’s also like an endurance race in which the best TEAM will win.

To build up your winning team, you will need to be able to select, hire, retain and utilise the best people. As leader of the gang, you will often be the linking pin between people who do not know each other, do not like each other, but will need to work together with each other as one unified, motivated and ambitious team.

Once your team starts growing you will need to unite, inspire, motivate and lead more and more people. First maybe 5, then 10, rapidly growing to 50 and then following that successful acquisition your team grows to over one hundred team members! Can you still lead this team without losing the personal touch and while maintaining valuable and personal relationships with many of your team members?

Even if you have never had direct reports before and even without ever having lead a team before, you can become a great leader! All it takes is leadership development: education, training, practice, coaching, mentoring, reading, changing your mindset, changing your behaviour and often changing your emotions…. Yes, becoming a true leader takes a lot! But to become a leading entrepreneur it’s a necessity!

For some useful leadership insights, please see: ‘The World’s Shortest Leadership Course’.

11. Can you deal with failure and fight depression?

Running a startup is like a rat-race in which only the fittest, fastest and smartest will win! Although you might think your new business is unique, it is very likely that there will be at least 10 to 12 other teams, companies and/or individuals trying to do the same thing at the same time somewhere around the world. Although nowadays founders can receive all kind of support and join incubation or startup acceleration programs not every startup succeeds. Just assume these numbers: over 50% of the startups will fail, over 25% will do so-so, over 20% will become successful and less than 5% will become very successful.

To make it to the 25% of successful startups you will have to face and overcome many tough and often unexpected challenges. You’ll have to learn how to accept and overcome failure, how to forgive others and how to keep believing in yourself and in your business venture. Being the founder of a startup means that you are the leader, so no matter what happens you will have to take the tough decisions and accept full responsibility for whatever consequences. It often can be very lonely at the top... Even very successful entrepreneurs can suddenly become depressed!

Please read about depression and learn about the insights so you can recognise the symptoms and know how to fight against it. Surround yourself with trusted friends, fellow entrepreneurs, a coach and a business mentor, so they can all help you to fight against any form of depression!

12. Can you continue to learn and develop your personality?

As a founder of a fast growing business you will have to be multi-functional and become multi-talented. While growing your business you will need to develop various new skills and strengthen existing ones to successfully cope with all kinds of leadership and management challenges.

Continues learning is critical for survival and success! Although most of your time will be taken by leading and growing your business, you will also need to allocate time to lead and further develop yourself. Besides getting the help of a leadership coach to accelerate your personal development, you will need to create an on-going and custom (time)flexible education program for yourself, which is focused on developing and enhancing skills and capabilities.

We're all busy building up our business and attending training courses/conferences/seminars is most often a challenge to combine with your business and private life.... So why not teach yourself using an easy and more flexible way? e-Learning!

Learning new skills and expanding your knowledge doesn’t have to cost you an arm and a leg. There are loads of free resources on the Internet that can help you to find compelling instructional videos, tutorials and classes to learn a wide variety of skills from improving your leadership skills, developing new sales skills to speaking another language.

13. What is your exit strategy?

As successful entrepreneur you will need to lead your business from start to finish. So where do you draw the finish line?

When and how do you want to exit your company? Do you want to sell it? If so, when and to whom? Do you want to list your company? If so, when and at which stock exchange(s)? Do you want to merge it? If so, with which company? Do you want to hand it over to one or all of your children? If so, when and to which one(s)?

For what price and under which conditions will you hand your baby over to someone else?

What’s behind the finish line? Imagine you have set your exit strategy and then… you’ve successfully executed your strategy: you’ve exited your company! Then what? What’s next? As part of your exit strategy I advise you to dream/imagine/decide what you want to do with the successful experience and reward(s) of growing and selling your own company. It will drive, inspire and motivate you to create your follow-up plan! Make it part of your bigger picture!

14. What is your company worth?

Are you good at maths? A successful entrepreneur knows the value of his/her company at any point in time! He/she also knows what kind of unique value he/she wants to create, which is often based on their exit strategy.

Why is this so important? Knowing what your company is worth versus your ideal exit strategy, timing and desired sales price, will determine if the time is right when you have an opportunity to sell/merge/list your company at any point in time. If you know that there still is huge growth potential to create more unique value, you might decide not to sell or you could include this value in your desired sales price. As long as you know what your baby is worth.

Knowing what the value of your company is also drives you to focus on creating and maximising value. This could be your brand value, goodwill, revenue, profit, client base, intellectual property, market share, market capitalisation, etc.

For each industry and market there are specific metrics and criteria which can be used for calculating the value of a company. I advise you to research and analyse these and then to use them to optimise the unique value of your own company.

15. Who is your coach and mentor?

Successful entrepreneurs, leaders and CXO’s often have one thing in common; they have a coach and mentor! A coach and mentor can help you to get the best out of yourself. A professional coach can help you with your self-development to deepen your learnings, increase your performance and enhance your quality of life. A senior and seasoned mentor can help you to succeed in your particular industry/market by sharing some of his/her lessons learned, experience and by leveraging his/her network.

A coach & mentor can be one and the same person. Preferably they are two persons: you find yourself the best certified coach and an experienced mentor. Your investment? Mainly time and brain power! Return on Investment? Huge!!!

You can find passionate coaches and mentors who will help you for free or for a reasonable hourly/monthly fee. See also: ‘Can You Afford NOT To Invest In A Coach And Mentor?’.

I hope these insights and qualities will help and inspire you to succeed as entrepreneur faster and better! Of course there are many more qualities and insights which can lead to success as entrepreneur; find them, explore them and use them to succeed!

“To attract attractive people, you must be attractive. To attract powerful people, you must be powerful. To attract committed people, you must be committed. To attract innovative people, you must be innovative. Instead of going to work on them, you go to work on yourself. If you become, you can attract!” – Brian Tracy

Thanks, warm regards & success,

Patrick

Note: Patrick is the founder and co-founder of various organisations focused on accelerating entrepreneurship, startups, innovation and investment management. To help more tech ventures to succeed smarter, faster and better, in 2009 Patrick founded Seed Accelerator; the 1^st startup - and business accelerator in the Asia Pacific region.