How to know when you are NOT an entrepreneur

http://m.entrepreneur.com/article/230471

Richard Branson on being an entrepreneur

http://m.entrepreneur.com/article/230495

Simple ways to know if your business idea is any good. Note: number 1 is passion.

http://www.inc.com/kevin-ryan/is-your-idea-any-good.html?cid=sf01002

Start up case study: design & fashion

How a love of colour bred success http://www.bbc.co.uk/news/business-25313250

Start-up case study: seaweed products

How a seaweed obsession paid off http://www.bbc.co.uk/news/business-25196870

It's hard to create and manage a start-up

A couple of items on the pressures of managing a start-up:

The first recognizes the psychological pressures there are on company founders. It should not stop you from starting a business, but knowing what might happen helps you prepare for it. BTW, many of my early coaching clients were start-ups. I help them, and I help people today, with both the strategic and financial planning, as well as being their 'hand-to-hold' when things get tough. After all, in those tough early months who can you share things with?:

• family - rarely they have enough to worry about, especially if you are the major breadwinner; 
• friends -perhaps, but you want them to see you as strong and successful, not a whiner
• investors - no way! They don't want to feel any more nervous about the start-up then they already are

So, talk to a coach - like me :) - someone that understands start-ups and works to help people all the time. Email to me here, or leave a comment.So, here is the link I promised.

This second item deals with reasons for failure. They are common enough, especially the micro-managing one. You know the problem: the start-up is your baby, maybe you've invested everything you own and you gave up a well-paid job to do it. So, you want to make sure everything that everyone does, all the time, it what you would do. Mistake!  Read more here.  Whatever happens, never give up:

Hate talking about failure, but understanding the causes helps avoid them

One to read from the 'guru' Seth Godwin.

About exits

OK, I know, it is a bit strange talking about exits in the context of start-ups, but one of my students asked about it in class the other day and this reminded me how important is the planning for exit in the early stages. Not your (as founder) exit, of course, although why not?  So, let me share with you some of the solutions that I have worked with:

I suppose a vague dream for some people in a start-up is selling the business, or some shares, to a big company, or on the stock market (IPO, Initial Public Offering), for big bucks - images of Zuckerberg the Facebook IPO float across our minds here. That is an 'exit' of a sort, and rather rare, and I will talk more about stock exchanges in a moment, but first let's consider the more likely scenario.

More usually, the 'exit' discussions are with people and organizations that maybe involved in the early funding. As you will have seen in an earlier post (Looking for start-up capital?) most early stage funding comes from personal savings,  friends, or family. While they may care for you and trust you, they may imagine, or even say, that they want their money back eventually. This is also true of other early investors such as angel investors (business angels) or venture capital firms (VC's), These latter two, especially, are in the business of providing you with funds for their own profit. They want to see some return on their investment. So, let's focus on those people and organizations, whoever they may be, that want to get their money back eventually, with a profit. Recall that, in the absence of a stock exchange, any shares that you issue, are effectively worthless unless the holder can find some way of selling them on. So what are the solutions? 
1. Have an agreement (formal contract) at the beginning of the investment process. One way is to agree that after, say, three years, from start the founders have the right, but not an obligation, to buy back a certain number or percentage of the investors' shares according to some pricing formula, e.g. a fixed number of currency units (euros, say) plus a percentage of profits or a defined percentage whichever is higher. An addendum might be that after a certain time, or after a certain event (such as a certain level of after-tax profits, or a certain cash flow, etc.), then buy-back of any remaining shares (priced according to a pre-defined formula) is obligatory. This approach helps to re-assure the investors that they will get their money back eventually, with some profit, assuming the business does not go into liquidation.
2.  Alone, or in combination with the above conditions, one may issue a special class of shares for the external (non-founder) investors, such as preference shares. These are a class of shares that give certain preferences: fixed guaranteed percentage return (that may be cumulative if there are no profits in any year), or that give preference to payout in the event of a bankruptcy of the firm, or a rightof conversion to normal shares in the event of a listing on a stock exchange. Sometimes these preference share may be called 'redeemable preference shares', allowing for conversion to normal shares under some conditions.

As for the placing of shares on a stock exchange, many countries have a secondary stock market on which, subject to listing conditions, companies may be listed. These secondary markets are usually used by firms wishing to create a market for their shares (allowing shareholders to monetize their investment) without the list and reporting rigors of the major exchanges.

There you are folks, some ways to plan for, and manage, exit for some of the shareholders. Please leave comments and questions if you want to discuss more.

Start-up case study: rolling 'incubator' in Africa

Now this is a good idea, and not just for the countries of Africa: a bus lead of start-up experts going around talking to people about creating a business. I wouldn't mind doing this in Greece, for example. Anyone got a bus and some seed funds?  Enjoy, again thanks to the BBC (GB): http://www.bbc.co.uk/news/business-25139586

Start-up case study - bee products in Greece

Here is a nice story - thanks to the BC (GB) news service - about a couple who met at work and converted the love of one of them for bees, and their love of each other, into a viable long-term business. No flash-in-the-pan this one, but a heartening and honest story about the vision and the hardships, and the disagreements (on-going) that are a part of most start-ups. While, I am usually rather skeptical about couples, or even friends, starting a business together - what works in a personal relationship does not necessarily (even usually) translate into a good working relationship - this one seems to work despite the ongoing conflicts. Perhaps, because these conflicts are talked about openly, they have found a way to make it work.  Enjoy! http://www.bbc.co.uk/news/business-25124048

LSE debate on the Lean Start-up

This is a one hour 11 minutes talk and discussion with Eric RIES on lean start-ups, especially interesting for those planning a product-based start-up. Enjoy, and let me have your comments.

The problem with business plans.. .

Another great source of information

Take a look at Entrepreneur.com on Start-ups:

Looking for start-up capital?

In my experience it is rare for venture capital organizations, business angels, and banks to be involved with the initial start-up funding. Personal savings, family, and friends are the most common sources. This is born out in this interesting Infographic, though note that it is based on the US.

Can creating a business with friends work?

Despite my earlier post, there are some special cases when this works. In this story, the friends split up after school, and then came back together again after some other work experience.

Don't start a new business with your school buddies

What works in school does not necessarily work in the world of  . . . . well . . .  work! See the HBR articlce on this below. If you are thinking about working with a friend it is really, and I do mean really, important to agree, and document (I mean formal contracts), who does what, and who has what authority to, say, spend money. Talk to me if you need advice on that. Now, for the HBR article, click here.

Keys for success: passion for what you are doing, and choose a great team

Steve Jobs: a very short video taking about success in starting a business. I agree with every word!

Creating your company in seven days

Here is James Caan talking to LSE about the importance of the people element in creating own company. Video is just over an hour but worth watching:

So, you want to start a new business?

So you want to create a new business?

Don't write a Business Plan (yet!) 

Don’t create a business because you ‘want to create a business’. Create a business because there is something that you want to be involved in and the only way you can do that is to create a business. And, make sure that you are fascinated by the business. The first years can be hard, and the rewards are few. If you do not love what you are doing it will be too easy to give up. Success with a new venture requires passion and persistence.

Do not start by creating a Business Plan. Start by creating a two-page Concept Paper: two pages is too short to be a Business Plan but too long to allow you to BS.  In the Concept Paper, be sure to include the following:

a)   The Big Idea (What is it that you want to do)

b)   The business model (How do you make money)

c)   Why you? (What expertise do you have, or plan to get that will ensure that you have the knowledge of the business/industry)

d)   Who are the customers? (Who will buy the product or service that you are offering, at the price you want to charge?)

e)   Why will they buy? (Where is the gap in the market that suggests you might have the chance to actually get customers?)

f)    What will be your legal structure? (Different countries have different rules. We will have information by country for freelancers - check it out.  In any case, you need to have an idea about how you will operate from a legal and fiscal standpoint)

g)   What will you, personally, do for resources while the new business is building to a point where you can be, at least, self-supporting? It may take a year or more!)

Write out your concept paper. Get down as much of this as you can, then share it with a mentor. Someone who will give you honest feedback. Sorry to say, but family members are often not objective enough.

Find a professional coach or mentor.  The idea is to use the Concept Paper as the basis for dialog between you and one or more mentors. Let them ask questions: "What do you mean by . . . . ?". "How does this work in practice?"

The idea of the dialog is to get inputs that will allow you to refine, improve, and clarify, your ideas to the point where everything seems to hang together and make sense. This may take three or more rewrites of the Concept Paper. Frustrating, perhaps, but better to have the frustrations now before you commit, than to go forward with vague ideas, and have mega frustration later. 

Once the Concept Paper makes sense, with no missing links, that is the time to draft a Business Plan, with some financial stuff to help validate your ideas in operational and financial terms.

More on concept papers

Discussing the concept paper approach with one of my students today (M) we agreed that sometimes it helps to jot down some numbers in the Concept Paper just to see if the concept hangs together. We were discussing an internet idea where the revenue stream depended mainly on the click-through rate from ads. A few quick numbers showed that the original concept was a non-starter. This is one of the key rationales for the concept paper. Dialog and work towards a working solution. Your comments?

Decide on a legal status

You will almost certainly need to have some sort of legal status to be able to charge for your products or services. This is especially important if you are billing an organization that will likely want a formal invoice. The rules vary by country. We will try to give some links and suggestions here for various states/countries. Please add your own ideas and suggestions.

The status will often vary from 'self-employed', through one of the various forms of partnership, to create a separate legal entity such as a limited liability company. For example, in France, one solution is to sign up with a company offering 'portage salarial' services. The service handles all the billing and collection, and manages the social security and related payments, provides a monthly 'payslip', and transfers the balance to your account.

Some ideas and links on becoming an entrepreneur:

Forbes: The Habit of Ferocity: What Every Entrepreneur Needs To Succeed
Forbes: 3 Startup Secrets From A Serial Entrepreneur

Vision and Mission of this blog

Hello,

Welcome to this blog, intended as a resource and sharing center, for all those starting a new business, or considering starting one.

In my role as a business consultant, a large number of my projects were start-ups, or 're-ups' (my term for organizations looking for a re-start). Even today, an important proportion of the students and coaching clients that I work with are interested in creating their own business. So, my vision for this blog is to bring together the various materials, tools, and ideas I have on start-ups, and, also, to encourage those interested in start-ups to find other like-minded people, and to share ideas and contacts. This is YOUR blog as much as it is mine.

My mission is to help people solve the age-old problem of finding a job. . .  So, if you can't find a job, make one! There are very many people out of work in Europe, and elsewhere. The old employment-for-life model is broken. With this blog, and it's sister blog 'Freelance Resource', my mission is to help people find their own way in the world without relying on organizations for employment.

Please comment, and share.

Thank you.