In the words of Will Schroter CEO of Go Big Network
WHAT MAKES YOU AN ENTREPRENEUR
Of course deciding to start your own business isn’t just a simple mathematical equation. There’s a great deal of risk involved with any new endeavor. But the true risk that entrepreneurs are most worried about are the risks associated with not trying their hand. However you test the waters, the goal is to truly test yourself. No matter what the outcome is, you actually win.
If the new venture takes off, then you’ve proven to yourself that you truly have what it takes to own your own destiny from top to bottom.
If the new venture flops, you can feel confident that you are maximizing your value inside of your existing organization (although if you’re really meant to be an
entrepreneur, you’ll just keep trying until one of those ventures succeeds!)
Test Yet in many ways, betting your own fortune based on your own skill set is the ultimate capability test. A financial planner that can take a small pool of their own capital and turn it into a mountain of wealth has clearly proven not only their capabilities, but their belief in themselves.
Act Like Number One
Wil Schroter is the founder and CEO of the Go BIG Network, the largest network of startup companies and entrepreneurs.
He is also the author of the new book Go BIG or Go HOME.
If you’re going to be a leading company in any industry, you need to start acting like #1, even if you are #151. In today’s market, even being number two is just not good enough.
Almost anyone can tell you who the world’s richest man is – Bill Gates. But when asked who numbers two, three and four are, people get confused. The reason is simply that number one garners all the attention, while number two (in this case the great Warren Buffet) gets easily swept aside from our attention.
Who Loves #1? Everyone!
Everybody that interacts with your business loves number one.
Customers make product choices all day long based on number one status. Think about how you make those very same choices in your everyday life. Imagine you are suffering from a terrible cold and walk into the pharmacy to get some cold medicine. You stand in front of two medicines that both effectively treat colds – the “leading national brand” and the “generic store brand”. Even though the leading brand costs three times as much as the generic you find yourself walking to the counter with the leading brand. You believe that number one is better even though you (and the FDA) are pretty sure they do the same thing.
Your customers aren’t the only people fascinated with number one. Investors are equally enthusiastic about #1 companies because they carry an air of legitimacy and success about them. Positioning a company to make more money as number one is much easier than trying to bring number thirteen to the top spot.
And don’t forget the media. The media is in the business of getting customer’s and investor’s attention. Number two products don’t get anyone’s attention unless they are unseating number one products.
Make Yourself #1
So you’re not number one in your category you say?
No problem – just invent a new category!
As a startup company being number one may seem like a contradiction. How can you be number one in any category if you just started your company? At Swapalease.com we were a small company just entering the automotive market. So how did we dominate our space? We invented a new category - lease transfer - and built our reputation as “America’s Number One Lease Transfer Marketplace”. We were number one because no one else at the time was in our market!
Just about any category can be sub-divided into a position that makes you the “market leader,” so use some creativity to claim your territory. This is a simple but effective tactic to begin building your brand and your sales presentation and it’s truly powerful in the minds of consumers.
Even though Warren Buffet isn’t the world’s richest man, he is certainly the world’s oldest richest man. It doesn’t take much to differentiate him and still provide a legitimate number one status.
You can get too granular here, so let me warn you. Telling the world that you are the number one realtor on upper Main Street that sells white houses probably isn’t going to attract the number one status you desire. But telling people that you sell houses faster than your bigger competitors (even if you sell far fewer houses) may get the type of number one status that brings you more customers. Your approach makes all the difference.
Your customers will respond much more positively to your number one status if it is properly placed in the context of their needs. Think about what they want you to be number one for and focus your brand there.
“Woo-hoo! I’m Number One! Now what?”
Great, you’ve just promoted yourself from “aspiring startup” to “industry leader”. Not bad for five minutes worth of effort. Now let’s talk about what to do with your newfound status.
Remember when you were convincing yourself to buy that overpriced cold medicine in the pharmacy? How did you know that the leading brand actually was the leading brand? You knew because they told you they were – all the time – whether you wanted to hear it or not. You heard it on radio commercials, watched it on TV, and of course read the brilliantly colored statement on the otherwise generic box. In short – because they told you over and over.
If you’re going to be treated like number one, you need to act like number one and pound your chest about it. Announce your number one status on every last piece of sales and marketing collateral that you own. Get used to giving your elevator pitch with the opening line “we are the largest stainless steel provider in Central Ohio” at every chance you get. Live your number one status in every aspect of your business.
After all, if you don’t claim your number one status your competition will.
You have no idea what you’re doing, and that’s just fine.
If you’re like 99% of the entrepreneurs in the world that have never started a company before, then there is one trait you inevitably share – you have no idea what you’re doing.
And that’s just fine, because despite how much we pretend otherwise, none of us really know what we’re doing.
Entrepreneurs are Type-A personalities comfortable taking charge and leading the way, so it generates anxiety when they realize (often without telling anyone) that despite all of their capabilities and for the first time in their lives, they really have no idea what they’re doing.
If you’re one of these entrepreneurs, you’re probably wondering how everyone else pulls off the launch of a startup company without having the same anxieties. The reality is they don’t. They’re all in the same boat because none of them have ever done this before. It’s all a matter of figuring out as you go.
There are lots of reasons why you have no idea what you’re doing, most of which amount to the fact that you’ve never had this type of experience before. Realistically entrepreneurship can only be learned through a little on-the-job training. So let’s take a look at why you haven’t had any up until this point.
You’ve never started a company before
Sure, you may have worked at a small company or had a big title in your last job, but until your home equity is the company’s line of credit, you’ve never really started a company before. If it feels like your days and nights are consumed with anxiety and doubt, you’re definitely on the startup path.
Most entrepreneurs confuse this anxiety and doubt with doing something wrong, as if they could somehow avoid it. You can’t. You’re jumping head first into the great unknown. There is no way to know exactly what to expect or how this trip will end. That’s why so few people begin the adventure, and those that finish it are so highly regarded.
Of course you can try to hold your head up and pretend like everything is OK, and you probably should. It’s OK to realize you have no idea how this thing is going to end. It’s your job to fearlessly lead your team into the black hole, even when deep down no one has any idea what’s on the other side.
You’ve never raised capital before
How many people do you personally know that have raised investment capital? Probably none. So how could you possibly know how the capital raising process works? You can’t.
You can read books about it, you can visit Web sites, and you can ask around, but generally speaking, the process of raising investment capital is something you learn by doing, not through osmosis.
If you’ve never pitched a venture capitalist before, there’s no reason you would have ever looked at a term sheet. There’s no reason you would possibly know why some financial projections are reasonable and others are ridiculous. You have to do it, take a few in the teeth, and move past it all in order to know how it works. That’s the process.
You’ve never been the Founder before
Maybe you’ve had a VP title or C-level title in your last company, but compared to the Founder, that doesn’t mean squat. The difference between an executive and the Founder is that the executive can quit and go somewhere else when things go poorly. The Founder goes down with the ship.
You can no longer complain about working for the “The Man” because now you are “The Man,” and it’s not always a great job. Unless you’ve started a company before though, there’s no way to get the experience of owning every last fault and benefit of a company.
Even though everyone is expecting you to have all of the answers, there’s no way you can always know what to do next. So you do what every other startup Founder does – you guess, and hope your best guess works. We all just keep making really good bets and hope we walk away from the table ahead of the game.
Just admit it – you’re lost – and that’s OK
You don’t need to admit to me that you’re lost - I’m just as lost as you are. But at least we can both agree that we’re all lost together and that there’s no point in thinking we’re the only ones that are dealing with the anxieties of starting a company.
The entire startup experience can be altogether humbling until you understand why you don’t know what you’re doing. It’s because until you’ve actually experienced a startup, there is no way to really get any valuable startup experience.
So take heart my friends, we’re all pretty much walking around in the dark. Anyone that tells you’ve they’ve got all the answers is just giving you a line of bull. There are really only two kinds of first-time entrepreneurs – those that have no idea what they’re doing, and those that lie about it.
Can you Afford Not to be an Entrepreneur?
There's an old adage that says "Entrepreneurs do what other people won't in order to do what other people can't."
The suggestion there is spot on - that the entrepreneurs who get to live the life people dream about did so because they were willing to make the sacrifices it took to make that life happen.
So the question really is: can you afford not to be an entrepreneur?
If the answer is “yes”, your life will probably be just fine doing whatever it is that you enjoy doing. But if you really want a taste for what it means to control your own world and reap the benefits of taking risks, starting off on your own is really the only option.
A Paycheck versus a Pay Out
Most people equate starting and growing a business to the financial rewards of being the business owner. That's because business owners enjoy the difference between earning a paycheck and earning the bigger reward - a pay out.
You may think those with a big paycheck, like the Celtics' Kevin Garnett's $25 million pay stub, are the big winners. Not at all. It's the guy who can write that check, like Celtics owner and Highland Capital Managing Partner Wycliffe Grousbeckand, who paid $360 million for the entire team.
Even if Kevin Garnett continues to be the highest paid player in the NBA for the next decade, he still won’t be writing the checks that his boss can.
The real cash comes from either the profits of the business on a regular basis or the eventual sale or IPO of the business down the road. Until your earnings are tied to the performance of the company, not your position, you’ll never be in a position to enjoy the real rewards.
Give Yourself a Raise
As big as they can get, paychecks are inherently limited to what someone else is willing to pay you. If you can’t stand the idea of someone else determining what your pay scale should be, then starting a company is the fastest way to change all that.
The day you start your own company, the only person that will ever determine your income is you. If you’re as good as you think you are, the sky’s the limit.
Most entrepreneurs are financially stifled in their current jobs, particularly among younger workers. Since salaries are often dependent on age and experience, not raw capability, your earnings may not at all reflect what you are truly capable of.
Consider the fact that Bill Gates, Michael Dell, and Steve Jobs were all around 30 when their companies went public. Can you imagine how little they would have been paid (by comparison) if they had stayed in their salaried jobs? Clearly their ages had nothing to do with their capability, and starting their own venture was the only way to prove that.
Don’t Leave Money on the Table
When you’re working for a paycheck, you’re making yourself a bit of money, but you’re also making the company a bit of money. Every hour of your time is putting a dollar in your pocket, but it’s also putting a dollar in the owner’s pocket as well, which is good for him, not so good for you.
The fastest way to double your money is to put both of the dollars in your pocket for the same amount of effort! Of course as the owner yourself you may have more overhead than you would as an employee, but long term you’re not only maximizing the payout on your time, you’re creating a business that will one day exceed your own value.
Even if you’re incredibly well paid in your current position, it doesn’t change the fact that you’re only one person. You can only earn as much as your own time and contribution will afford you. At some point, in order to get to the next level, you need the company working for you, not the other way around.
That means taking on employees and leveraging the economies of scale. As the employer, you can infinitely scale the size of your income by adding more business and more employees. At some point the cumulative value of their contributions will far exceed what you could possibly earn as a W-2 employee.
Stop the Bleed
No one is ever surprised to hear that you can make a great deal of money as a successful entrepreneur.
What is surprising is to consider how much you’re losing by not being an entrepreneur yourself. When you add up how much value you’re losing by taking a paycheck every week, you start to wonder what was keeping you from taking the plunge in the first place.
In many ways, starting your own company is the only way to eliminate the risk of not being paid enough.
You’ve got to look way past tomorrow
When I was a kid I thought I had it all figured out. All of the big decisions in life -- what I wanted to do for a living, who I was going to marry, and where I was going to live -- were easy to make. I was going to become a fireman, marry my next door neighbor, and live in my tree house.
As it turned out I never got excited about running into a burning building, my next door neighbor grew up to look like Kathy Bates, and aside from a more promising mortgage payment, my tree house never became the sweet bachelor pad I had hoped it would.
That’s the problem with making big decisions when you’re too young – you don’t have enough perspective to know how your choices will play out.
Startup companies are the same way. They tend to make their big decisions too early in their formative years thinking that life will never change. Well, unless you plan on living in your tree house, there are few things you should consider.
The reality is that you won’t be here a year from now. Your vision will change, the needs of your staff will change, and once you’re up and running, you may not need that capital after all. The biggest mistake you can make right now is committing to a path that doesn’t accommodate your inevitable change in the coming months and years.
Write a Vision Without Restrictions
Imagine if Bill Gates were to have set the vision of Microsoft based on the condition of the company in its first few years. Sitting with a handful of people in the room, the biggest vision they could possibly imagine with that team may have been to service their valuable partner IBM by writing some great code.
Gates didn’t think that way. He didn’t let his present condition dictate the vision of the company. He recognized that Microsoft was capable of being a dominant player in the PC market, regardless of the fact that their present reality was much more modest.
Your vision should be set based upon what you want to become, not what you are today. Every major company starts with just a few people in a room (sometimes less) before it goes on to become a powerhouse.
Keep Big Titles out of Infant Hands
Another problem is creating executive team members long before you have any reason to have executives. If you have five people in a room and one of them took a few computer programming courses in college, you may be inclined to make them the Chief Technology Officer of your company. At the time it makes plenty of sense, since no one else could possibly fill that role.
After a few years, your small band of five turns into fifty, and now all of your technology decisions rest in the hands of the CTO, who’s about as qualified as a help desk operator at Dell Computer.
Instead of just handing out big executive titles in your first year, try calling people what they really are. Focus on the role they fulfill. It’s goofy to call a guy the “Chief Technology Officer” if he could never handle those responsibilities in another established company. Let duty dictate title, and assign peoples’ roles accordingly over time, not in the first year!
Starve First, Raise Capital Second
Making gluttonous decisions about capital in your formative years can be one of the biggest mistakes you will make, and it’s one that you can never make up for. The first few years of a startup are incredibly capital intensive. You’ve got to make payroll, cover rent, pay for marketing and hopefully find enough left over to feed yourself.
Naturally entrepreneurs run to investors to help solve this problem. They offer big chunks of their company in exchange for enough cash to keep them alive. Inevitably entrepreneurs end up asking for way too little cash while offering far too much equity in exchange.
Instead of putting your hand out at the first sign of a cash crunch, wait a while and consider other options. Getting creative can save you from giving up your precious equity too quickly. Remember that the longer you hold out and grow without capital, the less equity you’ll have to give up in the future when you need the big checks to be written.
You’ll be all “Growz’d” up One Day
One day you’ll actually become the company that can execute on a huge vision, hire big executives and raise massive amounts of capital without giving up much in return. Until then, some present-day sensibility will help propel your startup past its current limitations. If you’re going to think big, you’ve got to look way past tomorrow.