Entrepreneurship is often idealized — you can “be your own boss,” attain “financial freedom” and work a “four hour workweek” — right?
Well, yes, those things are possible, especially in the long run. At least in the beginning, startup founders often enjoy an incredible amount of control over their day-to-day. And yes, entrepreneurship can lead to incredible financial benefits — nearly no job as an employee has the same upside that founding a company does (of course, founding is also higher risk).
And as far as that four-hour workweek goes? If your company either becomes highly profitable (and you’ve maintained control), or you exit and experience a windfall, then that’s possible too.
But before you get there, your startup has to survive. There are several tasks entrepreneurs in the early stages might hate doing (but most likely need to do) in order to stay viable and achieve those long term goals.
Get out of the office to talk to customers
As a technically-oriented founder, I’ve always battled with this one. In my comfort zone, I’m huddled in front of my computer, writing code, designing a new feature or managing roadmap.
In the early days of starting up, as tempting as that can be and as productive as it can feel to define and develop your product completely internally, it usually doesn’t work.
The problem? You don’t represent your target customer.
The reason? Your target customer isn’t just one person or company.
If you think about it, I’m confident that you can define at least two or three personas that your company serves. When you start to truly understand the needs of those who represent the full range of your target market, then you’ll have made an incredibly powerful step toward true product-market fit.
Here are some tips to implementing this type of customer development effectively:
- Define personas and talk to several of each: What are the primary use cases for your product, and who uses it that way? Like I said, if you don’t have two or three of these, try and flesh it out a bit more. Identify current customers or prospects that fit those personas, and visit them or get them on the phone.
- Ask open-ended questions: You’ll want to have questions to get the conversation flowing, but make sure they lead to opportunities for customers to bring up things you haven’t thought about. What you really want is to understand the customer better, and pre-defining them through tight questions won’t get you there.
- Watch customers use your product and don’t say anything: This is one of the most painful and valuable things you can do to improve your product. Simply watch customers use it and resist the temptation to help them. You’ll find out painfully quickly where the holes are in your product, where UX suffers, where bugs you thought you’d squashed still pop up and what’s driving customers away from your product.
Open up the first call funnel with investors
At ZipBooks, our outbound sales funnel for one of our products looks like this: we send 100 emails, 30 of which get opened. Of those 30, 10 respond. Of those 10, five are qualified, and of those five, three close.
End-to-end, that’s a three percent conversion rate, meaning, if we only send 10 emails, on average, we’re not going to generate a single sale.
It’s the same way raising money. Not every investor you talk to is going to invest — not by a long shot. But by having dozens of those repetitive, initial 30- to 60-minute phone calls or meetings, you’re likely to meet the right investor somewhere along the way.
Just like in sales, you don’t know before you make initial contact if there’s a fit, if there’s a conflict of interest, if the timing is right, or if you’ll see eye to eye strategically or financially, which is why you have to open up the top of the funnel.
Even though that process is no fun, and yes, there’s a huge opportunity cost to having meeting after meeting, if your startup depends on outside capital, then it’s absolutely essential to go all in and set up a ton of those first meetings.
Give up equity
I think we can all agree — we’ve arrived at the thing entrepreneurs hate doing the most: giving up equity.
I get it — your business is your baby. You built it from the ground up! Giving up equity can also mean giving up control. Without you, no one else would have the job they have or a company to invest in.
And while that’s all true, there are a couple of things at play here: yes, starting something is a big deal. But you can’t do it all. Key employees make valuable (even irreplaceable) contributions, and some of them are going to want or need to be compensated with equity.
Investors, on the other side, make key contributions as well, primarily financial. In a startup, money is fuel, and if you don’t have your own “sustainable” fuel source (revenue), then you’re going to have to get fuel elsewhere. That’s when investors, often angels or venture capitalists who invest primarily in exchange for equity, come in.
Fortunately, over the last few years, terms have been generally favorable to entrepreneurs, and things like participating preferred stock (where investors get their money back first and then continue to split the proceeds) are largely a thing of the past.
Don’t hand out equity like lollipops, of course. Make absolutely sure that the people on your cap table are people you want to do business with long term, and make sure you’ve done everything, every step of the way, with an experienced venture attorney handling the details so you know all your bases are covered. But when you do make that decision, recognize the contributions those people are making and get to work.
If you can stomach some of these less palatable parts of being an entrepreneur, then you’ll dramatically increase your chances of surviving. When starting up, surviving is the hardest part — if you can do it, it means you’re close to achieving the goals you’ve had all along.