Top 10 things employees must know before making the leap to becoming an entrepreneur
I spent a large part of my career in a marketing capacity working for large consumer goods companies – in fact, two of the world’s biggest.
In doing so, and through having such blue chip training, I thought I knew a thing or two about business. I thought I’d march into my first startup and show the world how it’s done.
Clearly, I was delusional.
What I did learn though, and very quickly, was that there are fundamental differences in being an employee versus an entrepreneur. Knowing a lot about business, doesn’t necessarily mean we can build a business. Knowing how to write code as a developer doesn’t necessarily mean we can build a community.
So here are my top 10 things employees need to know before becoming entrepreneurs.
1. The market doesn’t care how much your boss liked you…
Or how smart you are. It only cares about what you give it and if you create value within it – that is, value for the end users. The market doesn’t make judgment calls; it only feeds back reality on value creation. It does it in real time, too. Your boss on the other hand makes judgment calls, which are often based on personality, friendship, values and corporate politics.
2. Your idea has little real value
Ideas are like water; they are life giving, but they are omnipresent. We all have them. If the idea is good, then you can guarantee others have thought of it, are working on it, and some are probably already in market. When YouTube launched there were more than 400 other video-sharing websites.
What matters is execution and building a user base – they are the bits that matter. In fact, new ideas are harder to sell because you need to invent demand. Ideas are a small part of the success equation.
3. There are no resources at your disposal
All of the things you took for granted in your company are gone. There are no resources at your disposal. No departments, no staff, no supply chain, no existing customers. The job of the entrepreneur is to invent resources, to build an infrastructure.
4. 90% of what you did in your company is irrelevant
You used to manage situations, people, and politics, now you need to get things in market and invent distribution streams, usage and revenue. You are no longer managing a system, but building one. The tasks you did in the company are rarely what you’ll do when starting from scratch.
Employees tweak an existing machine – they are maintenance managers. Entrepreneurs need to be inventors, builders, creators, they need to make something from nothing.
5. Startup finance is different to corporate finance
In a company, we manage budgets. We spend allocations on projects and manage a P&L. In a startup, we manage cash flow: money in and money out. Startups need to remember they can go broke while making a profit, but going broke is not possible while a company is cash flow positive.
6. Entrepreneurship is not a path to riches
You’ve got to want the lifestyle more than a successful outcome, because the latter has a low probability. You’ve got to want it for what it is. The having needs to be in the doing. If you want to get rich, just stay in corporate and get good at property and share investing – that’s a more certain path to wealth. Entrepreneurship is about the human spirit and exploration – that needs to be the ‘why’.
7. Nothing is automatic, there’s nowhere to hide
There is no paid annual leave, no paid public holidays, no weekends, and no official hours. The 15th of the month will roll around without a pay day. You need to be able to cope with that. Slack days or weeks for that matter aren’t something you can ride and the company picks up the bill on with a wage. You’re fully exposed.
8. A startup is different to a business
Business and startups are not the same thing. Startups are about building something new. If you want to own and run a business, then buy a system which has proven success, like a McDonald’s franchise. You need to know whether you really want to create something, or just have more independence in your working or business life. There are other options outside of being an employer which might suit you more. Be honest with yourself.
9. You need to unlearn corporate thinking
It’s mostly the opposite of what happens in established companies. Companies test off market; startups test in market. Companies are risk averse; startups are risk tolerant. Companies avoid failure; startups must fail often and quickly. Companies reward internal performance; startups reward external performance. You need to flip your perspective pre-exit.
10. You won’t go hungry
If you’re well-off enough to be reading this (you’re on the web), then, if your first entrepreneurial venture fails drastically, you won’t go hungry. The sun will come up and your human spirit will be better for the journey. So while entrepreneurship is hard and different, remember life is about having a crack and seeing what’s possible. Best you get started soon.
Steve Sammartino is a startup coach for Pollenizer. Steve is known for helping companies transition from industrial era thinking into the digital age. He guest lectures in marketing at Melbourne University, writes for the ABC on business & technology issues and his blog has over 30,000 readers a month. This post first appeared on the Pollenizer blog.