Last week we had our 1 year anniversary of the GIBS Alumni Entrepreneurship Club. So far – rough guess – we have had over 900 alumni attending. Most of these amazing individuals are MBA graduates (we had a few PDBAs) and inevitably given the cost involved in doing an MBA, most of these were/are employed in mid-to-large organizations.
So why did they attend the Entrepreneurship Club? Everyone has different reasons of course, but here are the 3 categories I suspect most of the attendees fall in:
- Tired of having a boss and experiencing bureaucracy
- Have an idea that’s been nagging them for the longest of time
- Think they have discovered the coolest thing since sliced bread
But jumping from your big corporate ship into the rough seas of entrepreneurship can be quite a daunting task. There’s mortgage to pay, kids to put through schools, peer pressures to keep up. I get that. This is real life and real bills arrive each month. No income can hurt deeply and taking a step away from the corporate ladder can make one wonder if it is possible to get back on it later.
So here’s my perfectly biased advice for my dear friends who are considering making the jump or frustrated with their inability to find the courage to do so.
- Please remember that ideas are virtually useless (of course there are exceptions). Your entrepreneurial success is heavily dependent on your ability to execute. No-one gives a flying fish breakfast about your concept – they care about your solution, pricing and what pain you solve for them. If the pain is big enough they will pay for it.
- You will NOT get funding for your idea. Be prepared to live off your savings, borrowings, donations and lucky breaks for ca. 3 years (possibly 5). There are a couple of places that do fund ideas (www.TheInnovationHub.com) but most don’t. And venture capitalists don’t want to fund ideas too early: their ideal sweet spot is just before your idea takes off into the market, after all they have shareholders to please.
- Don’t quit your job yet. Rather attend networking events, SMMEs trade fairs, Business Schools, incubator events, mentor start ups, etc. The point is: don’t invent the wheel – rather find someone who is working on something that either is very close to what you wanted to work on or something that you are incredibly excited about… and then start dating that business. Don’t get married to it immediately. Mentor them. Help them. Support them. Meet them again and again. Make introductions and watch them in action. Get to know the entrepreneurs and the business so well that you are basically part of the team and help them grow… perhaps against equity… until one day it is big enough to allow you to make the jump from corporate into a smaller ship instead of just the cold water of start-ups.
- Consider the possibility of becoming an INTRA-preneur – i.e. an entrepreneur within an organisation. I know personally of many CEOs who would love to start new initiatives in their large organisations but are struggling to find the right candidates who want to risk their careers and give it a shot to take this opportunity and make something out of it. The advantages are obvious: large corporate behind you, some resources (office, legal, etc) and perhaps some return. Yes, you are not entirely your own boss, but it is a wonderful way of getting the best of both worlds when the complete start up jump is just too risky for you.
- If you do make the jump, no investor will fund your salary. They will (if you are lucky) fund your business. Assume a RADICAL decrease in your income. Sell your fancy car, your children (kidding), move to a smaller place and get ready to live a really modest life for a while.
- Your friends in the large corporates who thought you have a brilliant business idea? They will disappear. I promise. It is not that they mean bad, it is just that the dynamics of getting a large contract almost always reside in your track record (none if you are a startup) and resources to deliver (hardly any if you have recently started). Be aware of couch entrepreneurs who know everything better.
- Find yourself a mentor who makes your life uncomfortable and who has walked the talk. It will save you serious headaches and heartbreaks. But also be aware that people are people – advice will always be biased and subjective (I still make that mistake when mentoring…)
- You are going to run a business and not a hobby.
- Please decide what you are doing this for… Are you aiming for an income? Is it a big exit down the road? Are you looking for quality of life? All options require a conscious decision but you can’t have all of them. Most of the entrepreneurs I meet are running an aimless business with no idea what their destination is. As an aside, not every business needs to become a behemoth – you are perfectly entitled to live on a farm and grow vegetables and enjoy the sun and fresh air each day. Don’t make what others think your life.
- Never ever forget that you are running a business and not a hobby. It is your means of surviving so never forget the simple but crucial business equation, namely: Incomes must be greater than expenses.
- Screw innovation. Focus on making money. Don’t get me wrong: i loooove innovative ideas. I just find it easier to be innovative when you can pay your monthly bills. And making money means your solutions – whatever it is – is sustainable and likely scalable. If it relies too much on once off cash injections or CSI funding forget it.
- Learn the difference between needs and wants. A expensive phone and laptop is – with rare exceptions – a need. A consultant, expensive website, fancy new office are wants, not needs. The difference between wants and needs is not just cash – it is needing more effort to acquire more customers to cover the gap. Don’t buy in anticipation – buy only when cash is in the bank.
- And talking about cash in the bank… Don’t believe anyone when you start your business. Regardless how great your meeting went, how enthusiastic people were about your business, etc. The ONLY thing that counts is once the cash is in the bank. You can go bankrupt with a great pipeline of prospects. You don’t go bankrupt with paid invoices.
- Cashflow. I won’t say more expect to say that you’ll nod and promptly forget about this word until the day you experience it in first hand. You will never forget it after that day. The only way you can save yourself from this pain is by getting a partner who has been through this shitty situation before.
- As tempting as it is, don’t start a business or partner with someone on the first day. Think of business like you think of marriage – you don’t walk in the bar and get married. Start dating and getting to know each other first.
- The stats around entrepreneurship aren’t very good… but why? Because the majority of people are wonderfully passionate but wholly inadequate to run a business. Think of brilliant scientists who solve a business problem but don’t have the foggiest about the intricacies of growing a business. Make sure you know what you are good at and what you need help with. Different stages of your business require different people (e.g. at the start you need you, later you’ll need someone who monetises your business, then someone who puts processes and procedures into place, etc). The stats for marriage are also not good yet people continue to get married. Just like love, entrepreneurship sometime defies rationality. Frankly, you can talk all you want about being an entrepreneur, but just like love, unless you have actually tried it you won’t know what it really is like.
- Access to markets is your most important headache… Keep it in mind when you have a brilliant solution. And no, the world will not come knocking at your door. Who is more powerful? The manufacturer of a great type of honey or the supermarket who controls the shelf space? Remember this when you go out there. Incentivise those who have access to market. The end consumer is almost an after thought in this process.
Hope the above helped a little. You are always welcome to drop me a line if you have additional suggestions I can add to the above! My email is firstname.lastname@example.org
As a way of background, I worked for large corporates for some 16 years and have been an entrepreneur for close to 8 (I didn’t say a successful one!) so have a reasonably good sense – even if a tad outdated – of both sides of the river. This year my business partner (Anke) and I started a portal to help businesses all over the world find opportunities to work on with each other: http://www.JoinTheEquation.com