Yep, we're going to start another arc, this one on having your own company. I wanted to call it "Adventures in Small Business Management across the 8th Dimension" but didn't want to limit myself. The idea for this arc comes from a few sources. One source is two people who called me (not together, this was two separate phone conversations) and asked for my advice starting companies. Another source is the increasing number of people who've asked me to read their business plans and help them out.
The former doesn't really surprise me. The longer you're in business the better the chances are you'll stay in business. NextStage Evolution has been NextStage Evolution for five years now. A few years back we created a sister company, NextStage Global, so that I could get back to doing what I'm good at -- research, not running a company.
This arc, therefore, will deal with the joys and sorrows of growing a business.
First, are you sure want to start a business, let alone run one? Does the expression "The Inmates are Running the Asylum" have any meaning to you?
I didn't want to start a business and knew for a fact I didn't want to run one. I've written about an early presentation I did for an MIT Enterprise Forum. After my presentation a panel of local business experts (I'll get back to that, I'm sure. Remind me if I don't) asked what I wanted to do. There wasn't a moment's hesitation on my part. "I want to go back to my farm in Nova Scotia. I have no right to think I can run a company. I need to find a CEO to do that. Having me run a company is like putting me on a racehorse and telling me to win a race. We may go around the track but I won't like it, the horse won't like it and I can guarantee we ain't gonna win."
Let me share something with you; You have to be a little crazy to start your own business. Don't think so? Let's go down the list of questions which you should ask yourself before starting down this road.
- Are you putting together your business with your own resources?
- Are you independently wealthy?
- Do you plan on running your business out of your garage or basement for an indeterminate period of time?
- Are you seeking outside financing?
- Have you gone through a Family, Friends&Fools round? Politely it's called “Family&Friends” but it's really called “Family, Friends&Fools” because these folks are taking the biggest risk of everybody except you. You're taking the biggest risk. You do know that, don't you?
- Have you talked to Angel Investors?
- What about VC?
- How about Golden Fathers?
- What do you know about Equity and Merchant Banks?
- You do appreciate that this business is your idea, you're taking the biggest risk and by the time you're done you might own 5-10% of your business, probably less.
- You do know that you could end up owing the investors money because you didn't plan properly and they're concerned about the liquidity of their investment.
- What about the SBA?
- Have you talked with your local governmental economic development offices?
Congratulations. Neither did I, and of my "graduating class" of entrepreneurs (the other companies represented at that long ago MIT Enterprise forum), NextStage is the only one still around and going strong. What's the secret to my longevity? Easy. I know I don't know how to run a business. (more to follow...)
» Thoughts on Building a Business, part 2 from BizMediaScience
Adventures in Small Business Management across the 8th Dimension, Part 2 [Read More]
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