Entrepreneurship Lessons for Startups

Team Is the Most Valuable Asset In Early Stage Startups

Every innovation is fueled by human capital so there is no doubt that a team is what drives every success story. However, at startups’ initial stages, with just an idea, vision and founders’ passion to build the next big thing, it is the team by which the startup is valued, that is, it is the team that investors fund, accelerators and incubators recruit, and key talents decide to join. Building a startup team with a shared passion, vision and with skills that complement each other should thus be one of the main priorities of entrepreneurs while keeping in mind that.

A Startup Is Not a Small Business

It is a phase and not a type of business. It is the phase during which founders aim at finding and validating a model that scales repeatedly, usually by leveraging technology. Startups are built for growth and it is for this main reason that most startups are tech startups; reaching more people through technology. Small businesses, in the other hand, execute proven models rather than search for one such as owning a restaurant, barbershop or a grocery store. From a business and revenue model perspective, small businesses are ahead of the curve.

Always collect a nickel from everyone who promises to buy from you. Do this and you won’t need any other revenue stream. People make promises all the time, especially to bright-eyed entrepreneurs. Nobody wants to say no and it’s easy to say yes something in the concept-stage. When it’s time to actually pay, customers seem to vanish. Always remember, there is a difference between someone who says they are going to buy and a buyer. Do you best to figure it out early.

Failure Is Part Of The Startup Success Formula

This essentially applies to anything in life but we have numbers to back this statement when it comes to building startups. According to a research study by Paul Gompers, Josh Lerner and David S. Sharfstein, first time entrepreneurs have an 18% chance of succeeding (from idea to exit) with their ventures whereas those who failed once have a 20% chance of making it the second time.

Furthermore, with a successful startup in the books, founders have a 30% chance to build another successful venture. That is, startup founders are more likely to build a successful company if they failed than if they’ve never tried. Don’t be afraid to fail; it’s all part of the startup success formula.

Never let anyone get in between you and the money. This applies to two fronts- financing and revenue.

Most Startups Are Self-Funded

According to Fundable, less than one percent of startups are funded by angel and venture capital investors. 0.05% of startups receive venture capital funding while 0.91% are angel funded. Building or at least initiating a startup venture using personal savings, credits, family and friends has been the medium for most startup founders. 80% of startups are self-funded.

Don’t think your product will sell itself. This rarely happens. Entrepreneurs need to always be in sales mode. Unfortunately most of them spend more time developing their product than finding customers. If you simply can’t resist the temptation to work on your product make a rule for yourself to spend at least as much time selling it.

There Is No Such Thing as Bug-Free Software

Especially with complex software. Frequent changes in software specification, architectural decisions, requirement gathering, usability, robustness, etc. are a few reasons why complex software, one that attempts to solve big problems faced by many people at the same time, will have bugs in one way or another. Startups build great products, ones with less bugs and better experience, over time.

Culture Matters

It is the set of written and unwritten rules, values, and assumptions by which a startup operates and grows. More often than not, the startup culture takes after the styles, beliefs and personalities of the founders. While there is nothing wrong with that, it can be a limiting factor in startup growth, especially if the startup grows out of the initial startup phase and the values and principles that should drive the startup are not aligned with the culture. For instance, if among the rules and values in the culture of a startup are about taking measurable decisions, minimizing risk, and hiring locals first, growth potential and investors’ interest decline consequently.

Furthermore, startup culture has been shown to have a major impact on recruitment and employee retention. A survey by a commercial real estate startup, TheSquareFoot, revealed that for workers, culture is as important as business strategy, has a major impact on employee happiness and satisfaction, affects financial and employee performance, and highly influenced by the physical office space. Why is this so important? First, the findings show that startups with happy employees outperform the competition by 20% and secondly, highly engaged employees are 38% more likely to have above average productivity.