So you have jumped of the corporate "hamster wheel" and taken the red pill, what does this mean?
In the very early days it will be a big shock if you were in management at a typical corporate!
On the negative side I am sorry to tell you it may mean:
- No regular money and maybe some big debts
- Loss of social status (or possibly more depending on your friends)
- Lots of stress and pressure
- Pressure on your relationships
- No sleep and very long tiring hours
- No more IT dept, admin staff to run around after you and very little "people power" to propel you
- Loss of the posh company cars, the houses and the long holidays
- and the security…
In return what can you expect on the plus side:
- Self reliance
- and maybe, just maybe, a big pay day
So why do so many people do it then?
Well most that I know do it because they are fed up with being ‘told what to do’ and want to strike out on their own with all the freedom that goes with being your own ‘boss’.
Not that many start out just for the money (and that’s lucky as there is not usually much going around) but the ability to make a difference in their own and other’s lives.
Most think they have spotted a gap in the market, think they can do it better than their former employer or have come up with a new product or service they believe will be a winner.
I have huge respect for all the people that actually follow their dreams rather than just talk about them – most people would have taken the blue pill and still be in the cushy job working for someone else – but for those brave few this could be the beginning of something exciting and super successful.
OK so you have digested the bitter pill and you are hiding the spare room which is your new operational HQ (or wherever) what next?
Well most people would start the painful process of writing a business plan and rubbing their chin a lot, often taking months just getting ready because that’s what they are trained to do – polish up word and powerpoint and hone the idea in their minds and those of their friends.
NOT ME! Not any more…
In my view before you do anything you need to do lots and lots and lots of market research with target customers – no business plan, excel or slides – just get a sample of whatever your idea is in as visual a form as possible ( a picture, mock-up, diagram…something potential customers can see, feel, smell, play with…even if it’s a service).
Spend a little time and money on the basic idea and then hit the streets – in my case I am prepared to go anywhere to get market data, for my last idea I travelled to 10 cities across the UK and the USA meeting competitors, potential customers, suppliers, consultants and anyone who could give me useful market data that was ‘visceral’ and ‘meaningful’.
On collation of all of this data, over 3 months, I started a business plan – after I had got many of my assumptions either thrown out, modified or proven – only then did I feel ‘comfortable’ to write something that was realistic.
Most business plans I read lack this clarity of customer driven focus and often feel very light weight and unconvincing as a result.
Now, you may have come from the same industry and been about to beat up your old employer and think you know everything about the market and don’t need to do this…or it may be a totally new concept where you think there is no competition…or indeed you may think you don’t need to do this ‘leg work’ as market data is available in bought in reports. If you think any of the above you will be kidding yourself and by doing so you will be entering a much higher risk situation than is required.
As usual, I give this advice based on my own mistakes and prior experience – I have tried to enter massive markets where there were nice Gartner reports to prove how big the market was and how much my % market share would be worth — frankly all my assumptions were just bullshit and I knew it.
All business plans are a finger in the air, make yours a plan that at least is based on facts gleaned by you, in the very recent past with your real potential clients and you will stand a much greater chance of getting funded and being successful.
So now we write a nice big fat plan then, yes?
NOT ME! Not any more…
Sorry, I am still not ready to write a plan yet – sure I have some mockups and the basis of some market data but I really want some sort of pilot to test these new data points.
I am still testing my idea before I commit to it myself full out so I will put more "seed money" into getting direct feedback on the idea from the public in ‘real life’ conditions.
And it’s also now that I start fund raising…yes! I don’t even have a proper plan yet…
I now gather up as many people in my network as possible and get them to come and see my idea in the flesh, get their opinion, ask for their feedback and advice and ask them who will help me build my dream.
You will be surprised how many people invest in people and not business plans.
If you are being sensible you will try and get a small number of potential business partners, investors or employees to join with you on the ‘test run’. You will all know it’s a test and that it will be a low risk way to try the idea so no-one should get burned as they will know what they in for.
During the pilot phase you can put all the issues around the market, operations, staff, funding, marketing, sales and other expenditures – plus all the unforeseen costs and pitfalls – into the plan for real.
If the test looks good then put the effort into a first class business plan and massive fund raising effort.
OK, frankly most people reading this will probably think – no, I am itching to go I don’t need to do all this – I am a new and intrepid entrepreneur I don’t need to be so conservative I will just go for it.
I know for my first few ventures I did just that but the most consistently successful entrepreneurs are those that take a big risk but minimise as many of the variables and downsides as they can before they jump in the deep end.
Now…it’s up to you, go for it.
See part three for how to raise the right amount and type of money, from the right people and at the right time.