Starting a company is often compared to jumping out of an airplane and figuring out the parachute on the way down. It takes an enormous amount of courage and self-belief to take the leap, while also requiring willpower and commitment to build something viable and successful.
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We’ve all heard the phrase, when referring to entrepreneurship, “If it was easy, everyone would do it.” While I believe that to be true, I don’t think it’s hard work that holds people back from starting great businesses; it’s simply getting started.
In this Living the Startup column, I chose to focus on just that by sharing some practical ways you can turn your idea into a business, while drawing on my own experience as a startup founder.
OVERCOMING THE PERCEIVED RISKS
One of the biggest hurdles I’ve seen that holds people back from starting a company is the perceived risk. The financial risk, the risk of allocating a great amount of time towards something that could fail, and even the risk of embarrassment if things don’t pan out as envisioned. Before we go further, let’s break down these barriers and how you can overcome them as an aspiring entrepreneur.
FINANCIAL RISK
No doubt starting a company to replace your full-time income inherently comes with financial risk. But what can be done to reduce the pain if things don’t go as planned?
- Find a co-founder. Bringing in someone who is just as passionate about the problem you’re solving and is willing to take on 50% of the financial risk is a great way to cut the burden in half. Beyond that, you’ll have someone to share the wins and losses with and someone to push you when things get tough.
- Keep your day job. You don’t need to go all in right away. Keeping your job to fund living expenses while allocating some of that income toward your company reduces risk. Yes, this means sacrificing things like dinners out, trips, or new outfits but if you’re passionate about your company, sacrifices are part of the journey.
- Use other people’s money. This comes in many forms, but the principle is simple: avoid spending your own money (assuming you have some startup capital to begin with). Crowdfunding through platforms like Kickstarter or Indiegogo allows you to share your idea and collect contributions in exchange for deliverables. SAFE notes or convertible notes are formal agreements that can be used for short-term debt or equity investments. Entrepreneur-friendly lenders such as Futurpreneur can also provide startup capital without gouging you on interest, unlike traditional banks.
TIME RISK
Starting a company is not only a financial investment but also a massive time commitment. You can’t just snap your fingers and expect to build something great. The good news? There are ways to spread out the workload.
- Find a co-founder. A partner who takes on 50% of the workload can dramatically reduce your burden. Just make sure they’re aligned with your goals, passionate about the problem, and as motivated and hardworking as you are. Getting this wrong can be disastrous, so choose carefully.
- Use your time wisely. There are 24 hours in a day, you don’t need to quit your job immediately. You can keep your day job and build your company in the evenings or on weekends. Everyone’s situation is different, but as they say, “where there’s a will, there’s a way.”
- Leverage tools. With the rise of AI, tools like ChatGPT make it easier to create content, draft documents, and streamline processes reducing the time it would traditionally take to build your business.
RISK OF EMBARRASSMENT
Unfortunately, the statistics on business failure are sobering. According to the U.S. Bureau of Labor Statistics (BLS) and the Small Business Administration (SBA):
- About 20% of new businesses fail within the first year.
- Around 50% fail within the first 5 years.
- By 10 years, roughly 65% have closed.
While discouraging, these numbers also prove there’s nothing to be embarrassed about. So many people try and fail for a variety of reasons, but failure doesn’t mean your life is over. What’s worse than trying and failing is never trying at all and living with “what if?”
It takes tremendous courage to start a company. Even if it doesn’t work out, you should feel pride in taking the leap. By doing so, you’ve already accomplished something most people never have the courage to attempt. That deserves applause, not discouragement.
WHAT COMES NEXT
Okay, now that we’ve tackled the upfront fears, you’ve mapped out your time commitment, identified your funding sources, and silenced that inner voice telling you not to do it, let’s talk about the next step.
VALIDATION
You might believe you have the best product or service in the world, but if no one is willing to buy it, it’s worthless. Most people turn to friends and family for feedback, but that’s not always reliable. They might discourage you out of fear or tell you only what you want to hear.
Instead, seek out strangers who would be your ideal customers. Pitch them your idea. They won’t care about sparing your feelings and will give you honest feedback and/or validation. You can also seek advice from experienced entrepreneurs in related industries. They may not be your customers, but they can provide valuable insight into what it takes to succeed.
LAYING THE FOUNDATION
Once you’ve validated your idea, it’s time to lay the foundation. You’ve overcome fear, figured out funding, and proven your idea is viable, now it’s time to put it all into a business plan.
ChatGPT and other tools can help you with templates, industry data, and refining language. But don’t rely on them entirely. Recently, I received two business plans that were clearly generated by AI with little personal input. You must do the groundwork: understand your customer, study your industry, and craft your own strategy for promotion and growth.
EXECUTION
Once you’ve done the groundwork, you’re ready to execute and bring your idea into the world.
Building a company is hard work. It’s not going to be easy but if you are passionate about the problem you’re solving, committed to the process, and believe in yourself, you’ll do great things. No matter the outcome, it will be worth it.
by Kris McCarthy