Co-authored by Jody Porowski, CEO of Avelist
Starting a company isn't exactly easy. Here's what you should consider before you jump in...
1. Can I see myself working on this idea for 4-7 years? It's not too terribly hard to come up with an idea you're excited about. But I caution you to make sure that the ideas you come up with for a business are ideas that you can see yourself being passionate about for a very, very long time... For example, a lot of people don't know that I came up with the idea of Avelist four whole years ago. I worked two jobs for a long time when I started Avelist and then eventually (two years in) my co-founder and I decided to take the full-time plunge. And then it wasn't until two months ago (four years into the company) that we actually were able to say - YES, Avelist looks and works the way we intended it to be when we thought of this idea four years ago. There were a lot of moments when we ran out of money along the way and when it would have been easy to give up. But we were passionate enough about the vision of Avelist to keep going. This is why my first piece of advice is to choose an idea you can be passionate about for the long-haul. Because you might be lucky and find a quick win but most businesses take blood, sweat, tears, and TIME.
2. Is someone already doing this? Make sure you study the market and see if people are already working on your idea. If you find a competitor ask yourself one question: "Can I do this ten times better than them?" I say ten times better because of a few important factors. First, they were the first ones to market. This means they have a competitive advantage. They were an early mover. Being an early mover likely means that they already have a batch of loyal customers and may have already approached interested investors. And second, if you want to beat the competition, you need some key differentiators. Is it your location? Is it your branding? Is it your customer service? Is it a proprietary algorithm that makes your product that much better? Is it your price point? What makes you different enough that people talk about you and choose you instead of the competition? Because I can tell you one thing...promoting a business is HARD. You will thank your lucky stars if you can come up with something that is an "easy sale". You want your customers to feel that purchasing your product/service is the obvious choice.
3. Are you the person for the job? Let me tell you a little secret. You increase your chances of success if you believe in yourself. Like, really believe in yourself. Like believe that you were born to create this company. If you believe this is your calling, it will be natural to convince your employees, partners and investors that you are the person for the job. So think about your company and think about yourself. Who are your customers? Do you understand them? Are you targeting young moms, for example, and you happen to be a young mom yourself? Do you have past job experience that gives you a unique skill set necessary to lead your company? For example, did your last job introduce you to key decision makers at technology companies who will be the ones buying your product? Because in this case you have an immediate "in" with your customers. This is an advantage that Joe Schmoe off the street does not have. Or perhaps your whole company is based on beautiful design and you are an amazing designer yourself. Maybe you have experience working at top design companies. I heavily encourage you to start a company that you were born to start.
4. Whose help do I need? Realistically you won't have every skill set necessary to start your company. Perhaps you're an incredible designer, but you can't program worth a lick. Perhaps you are an awesome programmer but the thought of being a salesperson makes you want to cry. Perhaps you have all the work ethic, vision, and skills to actually build your company but you have no connections in the industry. Now is the time to take an inventory of your skill sets and your relationships and to think about what you don't have. And then go find it. Look for a co-founder (someone who is willing to make the same early financial sacrifices as you) who has the skill sets that you don't have. Or look for advisors who have tons of experience and connections in the industry you are looking to disrupt. Remember, there are many ways to pay people in addition to cash. And also remember that there are things you can do at the start to save money and avoid hiring an employee at the very early stages. I usually recommend (especially if you are a first time entrepreneur) that you build your core team (you, cofounder, advisors) and your prototype (a Squarespace or Wordpress site, for example) before you raise any money and before you bring any employees on board.
5. Is this idea a good business? So you've asked yourself these first four questions. Your idea is one you can be passionate about for years upon years. You are better than the competition, hands down. You were born to do this job and you've compiled the perfect team. Now you have to be very realistic and ask yourself if your idea can actually make money. Maybe it can't make you rich. It could still be a worthwhile side project that improves the world. It could potentially be a non-profit venture. But I encourage you to really think through your priorities and what you want financially out of the business. And remember, the harder it is to make money with your business, the harder it is to find investors willing to fund the development and growth of the company. I'm all for building things you are passionate about (hello, Avelist!) but also believe it's important to be realistic and go in with eyes wide open. This, after all, increases your chances of success. And I'm into that...