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MenuHow many times have you failed in your business startups?
As much as there is a lot to be learned in succeeding, failure also has a lot to teach us.
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It depends on what you mean by fail!
I only help software startup founders - not all founders.
I believe that there's no excuse for these founders to fail to get a product to market, if they have the funding to do it of course. Even then, there's a lot founders can do (for free!) to maximise the chance of getting funding.
That said, I see many founders DO fail to get to market - I'm on a mission to try to prevent this!
Now if you mean fail to make a profit, that's a different story. Obviously one of the first thing's founders should do is talk to prospective customers and identify a pain/problem that they are willing to pay for. That's a start but you never really know until people actually pay (and even then can you find enough of them?) so you should get to MVP as quickly and cheaply as possible (without compromising too much on quality). I show founders how to do that.
I believe that the industry standard is 90% of startups failing within the first year of launch. However, the more founders do things properly- including, importantly, getting help - I believe this number can be reduced.
Of my 21 products, I think that about 7 were very profitable (so 33% success for me which I count as a win). And I learned TONS from my 'failures'.
It depends on what you consider failure !
Is failure when you don’t reach your sales target 3 months in a row ?
Is failure when you need to borrow a little extra money to get through a tough period ?
The answer is these are not failures and any attempt to run a business comes with failure.
I have own a few businesses over 25 years and Yes I have failed if we use the above as a definition
Instead of looking at 'failure' let's look instead to what creates a successful project.
You will find that the best creators are those who can FEEL the CERTAINTY of a successful project before they start.
They will then take the STEPS to create success.
Each step they take will be taken with as sense of CERTAINTY - and if they lose that sense of CERTAINTY at any point on the project timeline - they will pause or change direction.
A powerful creator also knows this : CERTAINTY comes from being able to CLEARLY see what they want to create.
And in business terms the #1 tool that creates a CLEAR IMAGE for everyone is the business plan.
Most people think the business plan is just about getting the details on paper. WRONG - a business plan is so that you can CLEARLY SEE in your minds eye what you are creating in ALL the DETAIL that is needed at each stage of the project.
When you can SEE something clearly you feel a sense of CERTAINTY.
This clarity is what creates confidence and keeps you focused on all the points of importance.
So if you find you are failing - congratulate yourself - it means you are out of focus in some aspect of your project. Bring yourself back into focus and try again. But next time make sure you FEEL the sense of success and make sure you can SEE it before you take action. And make sure you are focused on EVERY important step ...
Keep having fun.
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The ways I've done this in the past are 1) Find some customers that are willing to hire you (or your product) but know that you'll only be free nights & weekends to support/work with them. 2) Find a "partner" (co-founder or other) that's got a flexible schedule that can help build the business while you're at work. 3) Block out nights, mornings and weekends to build the business till you have enough orders to cover 50% of your salary. This might mean 7pm-11pm most nights, and 4 hours each day Sat & Sun. Make progress (sales $$$) and momentum. All that being said, it's risk reward. Sounds like you want to avoid taken the risk, and I get that .. but the upside is always smaller. Unless you put yourself in a position to have to succeed (ex: quitting your job) then you may never make the scary decisions that are required to build a company (like cold calling, going in debt, making a presentation, etc). I'm on company #5 with many other side projects started nights & weekends .. so I get it - but don't be afraid to bet on yourself and go all in.DM
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What is a better title for a startup head....Founder or CEO? Are there any pros/cons to certain titles?
The previous answers given here are great, but I've copied a trick from legendary investor Monish Pabrai that I've used in previous startups that seems to work wonders -- especially if your company does direct B2B sales. Many Founders/ CEOs are hung up on having the Founder/ CEO/ President title. As others have mentioned, those titles have become somewhat devalued in today's world -- especially if you are in a sales meeting with a large organization. Many purchasing agents at large organizations are bombarded by Founders/ CEOs/ Presidents visiting them all day. This conveys the image that a) your company is relatively small (the CEO of GM never personally sells you a car) and b) you are probably the most knowledgeable person in the organization about your product, but once you land the account the client company will mostly be dealing with newly hired second level staff. Monish recommends that Founder/ CEOs hand out a business card that has the title "Head of Sales" or "VP of Sales". By working in the Head of Sales role, and by your ability to speak knowledgeably about the product, you will convey the message that a) every person in the organization is very knowledgeable about the ins and outs of the product (even the sales guys) and b) you will personally be available to answer the client's questions over the long run. I've used this effectively many times myself.VR
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Business partner I want to bring on will invest more money than me, but will be less involved in operations, how do I split the company?
Cash money should be treated separately than sweat equity. There are practical reasons for this namely that sweat equity should always be granted in conjunction with a vesting agreement (standard in tech is 4 year but in other sectors, 3 is often the standard) but that cash money should not be subjected to vesting. Typically, if you're at the idea stage, the valuation of the actual cash going in (again for software) is anywhere between $300,000 and $1m (pre-money). If you're operating in any other type of industry, valuations would be much lower at the earliest stage. The best way to calculate sweat equity (in my experience) is to use this calculator as a guide: http://foundrs.com/. If you message me privately (via Clarity) with some more info on what the business is, I can tell you whether I would be helpful to you in a call.TW
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How do i handle gift certificates when buying a business?
Great question, this is something that can be handled with a proper deal structure involving some vendor financing. I recently did a video about this very topic for one of my YouTube followers. Check it out here: https://youtu.be/hWm4ZQxWlEw You basically make the vendor's outstanding gift certificates a 'currency' which can be used by the buyer to repay the vendor loan. It's a net-sum game for the seller since he's already received the cash without having to provide the goods or services. Hope this helps. Feel free to schedule a call anytime you have a question about business transactions. DavidDC
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