13 things we learned in our first year
It has been 1 year since we became a fully fledged IT start-up and no matter how experienced you may think you are, there is so much to learn in such a short space of time. One of our core principles at Elm Solutions is that failure is necessary when moving at a fast pace. It means you are pushing the boundaries while learning the route to success. But the importance cannot be overstated enough in failing fast while maintaining the highest levels of delivery for your clients. All that being said, accepting failure as a necessity of producing the best quality is fine, but making the same mistake more than once is unforgivable. If I could impart 13 lessons to anyone about to embark on the IT start-up journey it would be the following;
1. Staff are everything
There is only so much you can do. There are no extremely successful companies that only have 1 or 2 staff. You need to surround yourself with people who are extremely passionate and competent in everything they do. If you do not look after your staff and work symbiotically to achieve your mutual goals then they will leave. In start-up’s, people often try to work for free in the short term in exchange for a bit of equity. Or even worse they will do it as a nixer. This is the sure fire way to achieve failure. Everyone who is working on your idea need to live and breath it. Doing it as a side project will lead to extremely poor quality deliverable’s. And when the staff are invested? Devote your effort to treating your staff fairly and always give them the time and attention they need.
2. Optimise your life
Friends of mine laugh at me when I say I have a cleaner at home. You may think this is a serious luxury (particularly after reading #5 below) but I view it as one of the most important parts in driving success. Think of it like the rest of your business. If you were to spend 4 hours cleaning the house instead of spending it on sales, it is a complete false economy. Sit down and put a value not just on your time but anyone involved in the start-up’s time. Then estimate your tasks, the priority and ultimately the value of them. If it is cheaper and easier to outsource it, then do it without hesitation. It makes absolutely no sense have your €80k a year developer spending a month of their time designing your website when you could get it built for €2,000.
There is an intrinsic value also in non work time. Start-up’s are a marathon and not a sprint, working 80 hours a week may be sustainable in the short term but you will burn out and the company will most certainly fail. In order to be creative and face the challenges thrown your way every day you should have at least 24 hours straight non work time. Remember the reasons that you are doing all this work for and always keep yourself grounded. It will keep you coming back with increasing vigor week after week, year after year.
3. Don’t be so aggressive
You will spend a good portion of your time immersed in your new business. Since you live, eat and breath it; sometimes taking objective criticism can be difficult to listen to, even if it is someone who is trying to help. But a real bug bear of mine is someone straight off the mark getting aggressive when you challenge their ideas in an unfounded fashion. I say unfounded because there are genuine cases where people are being obtuse and you can let your guard slip (try not to). But for the most part, you should take challenges on your ideas as a necessity. It is significantly better to have someone identify a flaw at a pitch meeting or investor meeting than a week after you have launched your product. Working through it now is always better than in the future. Each challenge is either reinforcing your understanding of the concept you are presenting and making you more adept to answering similar questions in the future or it is identifying a flaw that you can fix quietly behind the scenes.
A good adage is to use your ears and mouth in the proportion they were given to you. Defend your ideas when necessary but actively listen at all times and frugally pick your words for maximum impact. I am always impressed by industry heavy hitters who, for the most part, sit quietly in a meeting actively listening and speak up on important points with carefully measured words. You will notice everyone in the meeting hanging on their every utterance.
4. Cash is king
Learn to love the bank. Or for that matter anyone who gives you cash. Cash is everything. People will offer you various different things like cheap product or free time for equity. You cannot pay employees with cheap rent or get server space for an SME’s time (well unless you are a Del boy). Cash-flow is going to be that phrase you will hear in your nightmares when you are 90. You can have the best product, brand, people and company in the world but if you don’t have a tight control on your cash-flow you will erode confidence, your brand and ultimately your viability. Investors who see entrepreneurs with mature cash and financial controls will part with their money much easier than those without.
5. You’re poor now
Well, not really poor in the grand scheme of things as you are still better off than 99.99% of the worlds population but your personal cash will be severely restricted from what you may be used to or could potentially earn. You may have signed contracts, got investment or sold product for all sorts of money but that wont pay the rent or put food on the table. Also, friends will think you are a multi-millionaire who should pay for everything on a night out but despite what a company turns over or is valued at, the reality is you will not see that cash (if any) for a long long time. Never ever dividend cash to yourself while the company is still finding its feet, even if you think you have a good stockpile. There will be unforeseen circumstances and, for the most part, once the cash is out you will never see it again
6. There is no value until the contract is signed
I don’t know how many pitches I have been in where a entrepreneur shows an letter from a customer who promises to buy a whole heap of their product or a investor who has €1 million ready to go and they think they are 100% made where immediate funding is just a formality. People, for the most part, are all talk. They will promise you the world but when the invoice goes out or the bank details are sent, they all of a sudden become extremely quiet. Nothing is a sure thing until a contract is signed. 90% of a sale will get you nowhere. You need to be like a rabid dog when it comes to sales or getting investment, don’t stop until it is signed on the dotted line and the money is in your account.
7. Your brand is all you have
No matter what you have invented or what product you have, at the end of it all, your brand tells every single person that is important to your success who you are. A business is not about selling something once off. It is about winning the confidence of your customers to use more or recommend others to use what you have to offer. If you are untrustworthy or your reliability is poor you will never gain long term viability. And very often in a start-up you will need to pivot. The all important product will be different but what is the same? Your name. And that is what will win you more work.
8. Never be too important
There is no doubt your time will be in short supply. But you are not the second coming of Jesus. Do not get full of your own self importance. You need to make time for many different people even when it might not seem that important. A former school friend looking for career advice or an employee needing support may all seem trivial at the time but you can never make that call in a knee jerk fashion. No matter what a person’s level in an organisation or career stage in life, always make time for them.
Take comfort in the fact that it is basically the right thing to do. But if you don’t think like that, then take solace that you will reap the benefits in years to come when one of those people are a customer you are trying to win or on a board deciding a grant application.
9. A real strategy
Company strategies generally get a bad rap. I hate business bull s#%t with a passion and a big strategy document screamed this to me starting out. But you need to get away from the physical expression of the idea and just think of where you want to be in 10, 5, 3, 2 and 1 year(s). Every single stakeholders goals must align to the overall vision otherwise it is like 20 people all rowing in a different direction in a boat; you may get there eventually but after a significant amount of extra effort was expended than required. The strategy should encompass everything you want the company to be, from its core values and ethos to the vision and goals. It should scream out what your brand and product is about. You will never be able to expand and delegate tasks if people don’t know what they should be aiming for.
It is easy to leave the overall strategy late and think of it as a formal process that can be done at a later stage but it really is the precursor for moving from the start-up stage to the growth stasge. Give it a lot of time and effort as it will force you to reflect on what your whole endeavor is supposed to achieve.
Another important part which you will notice is; after about 6 months you may start getting fatigued by jumping from firefight to firefight. There is always going to be much more to do than can be achieved, so focus on the core 4 or 5 things that get you to the next stepping stone and try to forget the noisy distractions that appear important in the moment that you are in.
10. Evaluate yourself
This is very difficult when you make the step from a job where you had a manager highlighting your strengths and areas of improvement to having few or no peers. But you need to have someone give honest critic on your work. I think 360 degree surveys (if the sample base is big enough to ensure anonymity) and mentor feedback is the best source for this. It is linked to #3 above, take everything in and then evaluate what is the correct and best approach to take.
11. Read all of the time
A Kindle and access to Google are the most powerful tool’s any entrepreneur can have. There is a wealth of knowledge out there. Many people have done something similar to what you are trying to achieve. Read what they have to say and learn from their mistakes. One important element is to make sure you don’t just read things you agree with or reinforce your own viewpoint. Pick up literature you couldn’t disagree more with. This will force you to challenge your viewpoints. One example I have is my view on employee performance review. I hate the Bell Curve approach; rating you against your peers makes no sense because it is doesn’t focus on strategic deliverable’s enough and pits colleagues against each other. However, to ensure the model we use is better than the bell curve I need to be challenged by the biggest proponents in the game.
12. Grass is always greener
You will hit bumps on the way, there is no doubt. But always remember the other options, the; ‘could haves’, ‘should haves’ or ‘why didn’t we just….’ are not available now. It is such a cliche of a saying but there is no better way of describing it; “you are where you are”. You made the best decision you could at the time, if you made a mistake; learn from it and don’t repeat it, but, never dwindle. Options that seem easier now come with their own challenges. One personal example linked to #5 above is the surprise that I was going to be a dad about 4 months into the start-up. When times are tough financially at the beginning, it may be easier to think a permanent job is easier and more secure. But that is just fear talking and nothing ever good was achieved from caving into fear.
13. Support services are where you will fall down
Many articles you read will say your product is the most important part of your business without question. And, yes, it is extremely important, but if you don’t have the back end of your operations being run smoothly by extremely competent people you could find yourself in a real bind further down the line. Two big things that come to mind here are the accounting and legal side of the house. I remember going to a pitch of an idea recently where the N.D.A. we signed was in no way legally binding, it didn’t even have the right name on it! Their whole business could have been dead in the water before it even started if they share their secrets with the wrong person.
Contracts are also extremely important, particularly; the financial & IP clauses. You could find out a few years down the line that you don’t even own your own logo that a contractor worked on for example. If you are caught up in any sort of legal dispute even for a short time it could through serious doubts on your viability.
Of equal importance is that you keep on top of your legal obligations when it comes to tax. Everything stops if you owe Revenue money. A stop can be put on your bank accounts, they can prevent you from trading with semi state/state bodies…. Basically everything you don’t want. It might not always be easy or pleasant but always stay on top of your books, always air on the side of caution and always pay on time. No company was ever shut down for overpaying taxes!
I could go on even more but you really just need to make the jump and go for it. In outlining all these tips or lessons, you still have to get out there and make the mistakes yourself! And when you reach 1 year be sure to send me the link of your lessons learned post!