For some of us, the thought never crossed our minds, because we have come up with the solution to an existential problem that the world is just desperate to accept. We thought about it, we started developing the idea in our heads, imagining the perfect team for the task and assuring ourselves that as soon as the boss only dares to issue a misplaced sentence, we will leave the job and get going. Days, weeks, months, and sometimes even years go by and you hear at lunch at work on the new hot startup that is doing exactly what you planned to do. Jumping into the water and making the decision that we will no longer work as employees, and henceforth fulfill our aspirations, is perhaps one of the most complex decisions that can be made, this is because a lot is at stake here. On a personal level: the mortgage on the apartment, the payments to the kindergarten, the family vacations and the Holy of Holies, the annual snowboard vacation with the guys. At the professional level: interrupting the work sequence, the relaxed life as an employee, the annual bonus, the study fund, and the promotion around the corner. In conclusion, get out of your comfort zone and start walking in the desert, in the desert where every step you take will have far-reaching consequences, whether positive or negative. Before developing the idea, market penetration, and business model, however, there are a few stations you need to go through, the ones that may be the most influential in the design of your startup.
1. Go / NoGo
In the vast majority of cases, going independent in general and startup entrepreneurship, in particular, will be accompanied by economic deterioration over a long period of time, so the basis for any startup adventure is your breathing, ie how long you can hold your head above water financially. You are in life (children, mortgage, standard of living to which you are accustomed) and your ability to make far-reaching changes, meaning that the more you progress in life and the higher the household dependence on you, the more complex it will be to try and fulfill your entrepreneurial aspirations. Since most people are risk-averse, the cost-benefit analysis that underlies the Go / NoGo decision point will often be decisive against embarking on the new path and leaving potential entrepreneurs and their ideas in the houses. On the way. It's time to think about how you can get through the first half of the job which will be accompanied by low pay (if any). An example of this is passive wages. You should plan that in the first six months your sources of funding will be unemployment benefits and withdrawal of severance pay, combined with existing savings, you will be able to increase your survival period.
2. The initial money
At first, there is no money, period. We are already used to reading about the giant fundraisers, about the glittering acquisition deals, but the common denominator of most start-ups is that they started without a penny, or in professional language: "Bootstrap". It's hard to hire programmers, rent offices, commit to lawyers without having the ability to pay. Now, try to be creative. There are many entities in the market that offer work in different models of flexible payment, try to agree with your suppliers and service providers on deferring payment (in whole or in part) and condition it on raising, try to summarize reduced costs, you can also allocate shares from your company in exchange for services (but it is important not to lose Too many percent of the company already at the beginning). And what about some of the liquid money that is required at the beginning? If you are unable to set the minimum amount required for the start of the activity from your personal capital, whether as an owner loan or self-financed, it is recommended to contact people close to you, those who really know you over the years and believe in you. You will be surprised to see that there are quite a few people who will be happy to invest in you in the beginning.
3. Recruitment of staff
If you think that going out to recruit the staff for your start-up will cause battalions of programmers to march towards you, ask to join and agree to be a part of your start-up, and for free. then you are in for a surprise. Recruiting quality partners is not an easy task at all. Why? Because why should they join? Do you promise them a salary? Will your venture really succeed? Is it really challenging their abilities? Ahh, so there is no salary but there are shares. and how much is exactly these shares worth? In general, you should know the reality well, the most difficult technological partner to find. If there is more than a drop of talent in their head and fingertips, dozens of them like you probably turn to them each month. And just to clear the ear - in the current market situation, a mobile developer with two years of experience will earn an average of about 20 thousand a month. Beyond the difficulty in finding the technology partner, it is very important technical knowledge, business background, expertise in the field of activity of the start-up, marketing ability, and more. Now, you must think about the reward model you offer to your partners: stocks, options, basic salary, or a combination of all three. Another small tip - strength. It is not It will be easy. You will need long-distance runners. The life of a startup company, in the beginning, is not easy at all and includes countless ups and downs that the team will have to deal with on a daily basis. Also defines the scenarios where things are not working out as you planned.
4. The departure
For those of you who will reach this stage, here in fact the hourglass starts working, and quickly. And so, efficiency is the name of the game. The intermediate situation in which you are outside the comfortable framework, in a space of uncertainty and without a financial horizon, requires you to reach the milestones you have defined quickly and efficiently. For this purpose, you must be assisted by a regular work plan that touches on each of the core axes of startup work - business, technological, legal, and marketing, and an up-to-date burn rate analysis, which will show you a snapshot of the company's finances and when they are expected to end. A business that aims to enable you to get to know the field of activity, the market, competitors, the target audience, and formulate the action strategy.
5. Raise a significant amount of money
Raising money is probably one of the most complex processes you will go through. The absurdity is that for the most part, recruitment will be more complex than the development of the technology itself. So before going to raise money and meet the people who really should love you and your idea, you need to equip yourself with professional jargon and start using terms you need to know and they like to hear, concepts like Scale, Long Tale, Conversion, Proof of Concept, CPI and more. Once you equip them, you will feel much more confident in yourself and your venture. You would probably argue that the marketing would go viral, that the return on investment is within two years and the development costs are already behind. Despite these impressive arguments, the opportunities are not many. The sources of financing available to you are few: the banks will not lend you money, the institutional bodies will probably not invest, the venture capital funds will require more proof and there are the angels. To recruit an angel, you need to meet the right person who connects to the field in which you are engaged and at the right time. Starting to generate a return on investment. The negotiation process is long, complex, and sometimes tedious. Keep in mind that you will usually be required to combine investors when each investor is attracted to conditions that benefit him for all sorts of reasons (I went in first and the risk was on me, I invested the largest amount so obviously I deserve, I closed the round and without me, everyone goes home). The types of benefits that you will be required to allocate are varied (a seat on the board, a discount, a spread of investment payments, an option to invest under the same conditions in the next round, dilution protection mechanisms, veto rights over core issues in the company, etc.). magnificent! But as you will understand very quickly, money is not everything. Now you need to examine your relationship with the new shareholders. The main challenge now will be to try and maintain flexibility in the decision-making ability and continued proper management of the start-up.
Important reminder: Any reinforcement and goodwill that comes from home will help you overcome the difficulties. You will find yourself tired, upset, nervous, resentful, confused, but all of these should stay in the stairwell. For those who have forgotten, your spouse is not just an ideological partner in your startup, they have 50% of your stock.