There’s never been a better time to launch a start-up — at least that’s the story we’ve been sold. Massive capital raises grab headlines as well as the hearts and minds of hopeful entrepreneurs. The barrier to entry is low, the goals are sky-high and there’s a feeling that overnight success is just an idea away.
For instance, Melbourne-based BUCKiTDREAM secured $1.3 million investment via Club Investible, launched with a promotional video featuring Richard Branson and even teamed up with the Ellen DeGeneres Show to promote the platform. To the outside observer, it may seem as if it’s been an overnight success.
The reality of building a start-up, however, is far from what many new founders imagine and most don’t realise how treacherous the waters can be. The problem is the harmful combination of high expectations and low preparation. Like the gold rush of the mid-1800s, people get sold a dream that falls short when the wheel comes off the cart. Start-ups commence dreaming of the high life but too often find themselves in the high seas instead.
Aside from the importance of having a business idea that solves a key customer pain point and a bulletproof business model, success usually starts and ends with the founder team. And in an environment where most start-ups fail, it’s up to founders to prepare themselves for the tough road they will face. The route to business success will never be smooth sailing but preparation can get you through the storms more quickly and easily.
The right experience
As in any new endeavour, you often don’t know what you don’t know. Silicon Valley VCs always prefer to back someone who has had a business in the past, even if it has been a dramatic failure, rather than a first-time entrepreneur.
Similarly, you need experience in the industry or sector you’re looking to disrupt. You might have an amazing solution to a frustrating problem or compelling insights for new product, but if you haven’t had actual experience in that industry, there’s a good chance you won’t succeed because of the quirks that only industry specialists can successfully navigate.
For example, Michelle Sutherland, the founder Gen-S from Investible’s Lab#3 program, launched an online community helping sales professionals develop and grow into the next wave of “salespreneurs”. Michelle capitalised on the experience building her own Arbonne network marketing business, with 2000 sales consultants. This management experience and opportunity to understand the aspirations of people wanting to build alternative income streams enabled Gen-S to develop a community of self-employed sales contractors.
Capital raising experience is another critical success factor. Raising funds is a specialist skill that can make or break your business.
The proven skills
Going from employee to entrepreneur is the same as going from functional specialist to business generalist. As a start-up, you’ll need to have an understanding of marketing, sales, operations, recruitment, technology, payroll, finance, business development and more.
Setting yourself up for success means filling the gaps in your knowledge and learning best practice from others who have already made the leap. You must invest in your entrepreneurial skills development and immerse yourself in the start-up ecosystem.
A founder team is a great way to fill those gaps. The winner of Investible’s Angel Pitch competition, ELANATION, is a good example. Its kid-friendly wearables, which connect a virtual community with sports and outdoor activity, require founders with an eye for design and knack for understanding children. Its co-founders have complementary skills — Catherine has a background in industrial design and experience working with Bang & Olufsen, while Aimee has experience founding and licensing Billy’s Boatshed and working with kids as The Wiggles’ very own Dorothy the Dinosaur.
The right amount of leverage
If you don’t have a great network already warmed up at an arm’s length, investors will be a much harder sell. These people buy you, not the business, so you need to be prepared to put your relationships at risk regardless of how confident you feel you will generate them a return.
Case in point is BUCKiTDREAM founder Tim Carroll. Serving as Village Roadshow’s global chief of marketing helped him develop powerful connections that positioned the start-up for one heck of a start.
Another important aspect of leverage includes your financial security. It’s likely your business will chew through any spare cash in the business, and your own pockets. To pay for your living expenses, you need savings, family support, residual income, a moonlighting job or a patron. Don’t start a business without it.
Creel Price is CEO of start-up generator Investible