Monday, February 13, 2012

Avoid Hunting Elephants (and 4 other things to avoid as a Startup).

This list is culled from some of the negatives featured in my Ignite Cincinnati #4 talk and a few more that I couldn't fit in there, or that I have learned since.

1) Avoid Hunting Elephants (in the beginning).

Yes, it's tempting to get that giant win that will establish you as a company. The deal that will solve all your financial problems forever, but the reality is elephant hunting for startups is rarely successful. It is often extremely detrimental because it consumes valuable time and capital that could be used to pursue smaller opportunities that are more likely to close. Most large companies will not buy from startups because of the risk.  If you must hunt elephants, go straight to the King (CEO) if you can and get a definitive answer on whether or not they do business with startups.  The only time I have seen Elephant hunting work is if you either a) have a truly disruptive technology that will give the buyer significant advantage by being first, b) you have the capital to fund the time it takes to complete the hunt, or c) you have the necessary connections to overcome all objections.  Otherwise avoid it until your well established.

2) Don't Hire Your Friends.

OK, so the comedic timing in the video (at 2:06) was spot on, on this point.  But setting that aside, only hire your friends if you are very confident they would remain your friends if you have to let them go.  An additional point to this is don't oversell the opportunity to your friends.  Be brutally honest about the state of business upfront, and along the way.

3) Don't Buy New.

Cash is the single most precious resource your business will ever have.  Don't waste it on new stuff.  I hate to say it, but take advantage of the businesses that ignored this rule and went out of business.  You can find almost everything your business needs on eBay.  There's nothing wrong with factory reconditioned, or yesterdays model when your starting out.

4) Don't Buy Software

There are so many benefits to running your core business functions on SaaS (Software as a Service) Applications.  But the two main ones are a) Most of the vendors do not require term commitments.  b) You don't have to buy Hardware to host the application.  I just don't understand the start ups that run out and buy Web Servers, Email Servers, File Servers, and expensive accounting and other software packages. Also most SaaS vendors have free versions that may well suffice for the first few months or year of operation.

Check out my prior blog article "The 10 Best SaaS Applications for Small Business" for some recommendations, but keep in mind Microsoft BPOS is now Office 365, and is an even better value.

Keep in mind also that there are great programs aimed at arming Startups with the essential tools to get off the ground.  StartupAmerica and Microsoft Bizspark are two with which I am familiar.

5) Don't Be a Loner

The reality is most entrepreneurs are pretty egotistical know it alls.  But recognize you really don't know it all.  Find mentors who have been there and done it, who have picked up all the scars, and learned many of the lessons.  Most of them love to share their knowledge, usually a lunch, or a few beverages will do.  Find out where the entrepreneurial movers and shakers hang out and make that your new regular watering hole.  Just don't be a loner.

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