Some thoughts on entrepreneurship
quite a while ago I founded a company with three more guys. Looking from today it was something like a huge game but it got very serios in the end (not only the income was respectable but also the list of projects we did).
We started as a group of 4 students by paying 40 Deutsch Marks and had a company. To be very honest we did that because we wanted to be able to buy hardware cheaper and to experiment a bit around.
Our first order brought reallity to us. We had to finance the parts to be able to deliver in the end. This brings me to my first lemma:
Never underestimate money and cash flow!!!
I learned here quite a lot while doing this low level economics. We financed all on our own which means to keep the cash flow running we invested our our private money. Later I tried to stack some flowing cash to be able to handle bigger orders. This is what really kills you: Not only you have to find the next order but also to find the funding for it. And to risk that nobody pays in the end.
Another thing was that we have been four smart guys. Each individual in its own domain. On the one hand this was our strength because we were able to do simply everything. From infrastructure installation (yes, I mean the cabeling) to huge CRM Systems (you guessed it was Siebel).
On the other hand this really was the start of our problems. You aquired a job now find the guys to do it. Quite frequently I heard that this or that is below the line. If I spend my time for other things I would earn twice as much than doing this kind of work.
The bad thing is: It is totally right!! You should always do what brings in the most revenue. No question. So we started to bring in freelancers to help. This makes things more complicated but helps to outsource. But it was a temporary help.
In the end we had to admit that we were not able to find the same vision for the company. This was the real killer. How do you make sure that everybody equally invests in work, cash, and risk?? Certainly you have to deal out some gentile mechanisms, we never did that.
So, second lemma:
Start with a vision or start alone!!! Otherwise you will never get a vision.
And a vision is the key to solve a lot of problems. Trust me!!! And I do not mean a vision like the one we had: Fun with electronics. Make up your mind wether you want to grow the company. One major step is when you hire people, this changes the game dramatically. From now on you are not only responsible for yourself anymore but also for the sake of others. They trust you in a sense and you have to trust them. They will invest and are expecting you to invest also. As long as you dribbling it away as a freelancer, don't bother. With employees the games changes.
What kind of jobs to take, how much to calculate for it... This questions can be answered when you have a vision to follow. Maybe you want to invest strategically (do a job for less to enter a new market or gain a new customer). You can do that when it matches with your strategy which matches with your vision otherwise don't. Since we had no strategy we invested quite a lot in different markets. Don't get me wrong I learned so many skills but in the sense of the company (and as such our future) it was dumb.
Never sell under value!
This seems strange because I just said maybe you want to sell under value to be able to enter a new market. Yes, but be careful and most of the times: Don't sell under value. I learned two things: First things being cheaper then the average are likely to be seen as not worth the invest. So if you want to sell your services as high value and good quality don't stick that sticker on your bumper at start. Next once the market is used to your prices you have to keep it otherwise... We did a fault by not knowing actual prices for the services we delivered. So it was even harder to enter the game later on...
So much for my thoughts on one round jogging ;-) Next time I have the time I will go on ;-)