Why do you actually want to launch a start-up?
Why do you want to launch a start-up?
Launching a start-up is an exciting challenge for many aspiring entrepreneurs. The first part of any successful venture is finding the answer to the question: why should you want to launch a start-up? After all, launching any business requires substantial amounts of capital, time and effort so it must be done for the right reasons. This article will explore why some people choose to start their own businesses & more importantly why they shouldn’t.
By exploring these factors, aspiring entrepreneurs can arm themselves with the knowledge they need to make the right decision and successfully launch their dream start-up.
1. What is your objective in launching a start-up?
Starting a business venture is an exciting and rewarding experience. It requires dedication, commitment, and a drive to uncover opportunities and mitigate threats. It is about creating something unique and innovative for the customer — something that meets a need or fills a gap in the market. But before embarking on such a journey, there needs to be a clear understanding of the objectives in launching such a venture. The main objective of launching a start-up is to increase profits, increase market share, and build a reputation for quality and innovation. But thinking on a personal note, the objective is typically to solve a problem, feel like they are creating & not just working for someone else, maintain additional control over working hours & potentially become exponentially wealthy.
On an analysis over these different factors, you need to understand that in the vast majority of cases they are just not true & or likely will not come to the same expectation.
Income, this is a very hot topic amongst founders & VCs alike. Most entrepreneurs may come from a high achieving background, think banking, Consulting etc. and this will be a huge paycut for a number of years. This may pay-off in 5–8 years but for the vast majority it won’t.
Income is a bad reason to launch a start-up, there is limited resilience when economic choices are made.
Hours Management, Founders do not work good hours. Every hour is working, thinking, tinkering & even more so spent as your entire personality. You will aim to talk about the start-up as much as possible. Compared to the ability to switch off, every day will be the start-ups & every hour
Control, This is a critical reason, in the development of a start-up pivots are frequent, painful & can spell ruin. The largest firms highlight that a founder who can navigate a fast iteration, learning curve & pivot make for great potential. But you are still providing a solution, you have operational control but you are still responsible to investors, customers & your employees who are taking a significant risk if the company were to fail.
So, why should you start a start-up?
A critical point that needs to be made is that:
1) You are solving a problem you care about
2) You know this can have long term value & can solve other problems long term
3) You have enough resilience to manage your house effectively
4) You can afford for this to go wrong
5) You have always had an entrepreneurial spirit
If this sounds like you, then do it!
2. Do you have experience in what you are trying to accomplish?
When launching a start-up, it is both vitally important to have some experience in the field that your start-up is focused on & to also have a fresh perspective on either an industry, or common team problem.
Whether the goal is to develop cutting-edge software, create a retail business, or launch a cutting-edge service, potential investors want to know that the founder is knowledgeable and passionate about the industry.
For entrepreneurs without direct experience in their intended start-up’s industry, it is allowed, but it does make the venture riskier. This is also difficult for networking, developing traction & social capital.
However, if the entrepreneur has a history of success in related areas and can demonstrate success in the field, investors will likely be much more likely to invest. Cross industry innovation has been absolutely critical in the development of different industries. The ability to take business practices across into similar fields can be extremely lucrative, e.g. drawing on band merchandising trends into sports.
Successful entrepreneurs without direct industry experience can still make their start-up a success by drawing on other dimensions of their experience.
Utilizing knowledge and skills gained from previous educational or professional endeavours can help the entrepreneur to develop a successful start-up. For example, understanding the common practices of other businesses in the field can help to build upon the foundation of the start-up’s industry. Critically Angels, VCs understand that a million ideas are created everyday that could be successful, they are banking on you, the Founder & Founding team to make this a reality.
Three questions to ask & to demonstrate as part of your start-up is Why this? Why you & Why now?
4. Are you happy for this to become your personality, drive & muse
Despite the potential financial and professional rewards that come with launching a start-up, it is important to note that starting a new business is not only a significant financial investment, but it can also become a consuming and complex endeavour. Making the commitment to launch a start-up should be careful considered and the associated rewards weighed against the risks and sacrifices involved. Before embarking on this journey, those considering launch a start-up need to take an honest look at themselves and ask ‘Am I really happy for this to become my everything?’.
Being the founder of a start-up is demanding and rewarding, but it can also be an emotionally and physically draining experience that requires dedication and mental fortitude. It should be considered a part of one’s character, and it is integral that it aligns with their existing values and individual passions. This passion is often the driving force behind successful start-ups, it also the passion that will drive forward the founder through the pain, relationship pressure, low pay checks & all the ‘no’s’ along the way.
It is important that those looking to found their own business are passionate about their overall vision and its potential impact. It is natural to feel overwhelmed by the level of responsibility, but it is essential that the decision to launch a start-up is made rationally and honestly.
Those who are happy for starting up a business to become a part of their person, forever to be known as the ‘Founder of XYZ’ need to be realistic about what is involved, and be aware of the immense effort and dedication that is necessary for a successful launch. Though launching a start-up can be a daunting proposition, it can also be incredibly empowering and rewarding. The right perspective and dedication can go a long way to ensuring a successful journey. Likewise, those who are comfortable with this endeavour becoming a part of their identity, motivation and inspiration will often be the people who achieve the greatest success.
5. What risks do you have? What personal runway do you have?
When launching a start-up, there is a lack of stability, security, and success that may lead to a devastating financial situation. Many life-long dreams of creativity and prosperity can evaporate into thin air very quickly if proper planning and preparation are not done ahead of time.
This is why it is incredibly important to know what the risks of starting a business are and what personal runway you have before launching your start-up.
One of the biggest risks of launching a start-up is the lack of capital and funding. Start-ups need money to get the business off the ground, though most entrepreneurs start out with very limited resources. Finding funding can be difficult without having the right connections, resources and experience. It is important to understand the risk of not having enough capital to sustain the business if the process fails initially. Start-ups also often require a large amount of stress, work and long hours of dedication. This type of constant commitment can take a toll on both your mental and physical health with data suggesting entrepreneurs report depression at 30% higher rates than the general public.
It is also important to consider how you will manage both your personal life and other business commitments while working. A critical business movie trope amongst ‘business biopics’ is always the focus on Men who neglect their family in lieu of business success, think Wolf of Wall Street, The Founder, this is actually reflected in reality, with high divorce rates amongst founders.
Both external and internal risk factors should always be taken into consideration when launching a start-up. It is critical to identify any potential sources of danger that could jeopardize the success of the business and understand the personal risks ahead of time. It is just as important to know your personal runway — or how much time and money you have to invest in the start-up. Having a realistic budget and timeline is essential, as is knowing when to pivot and when to seek help from other sources, such as angel investors or venture capitalists. A key question VCs are now looking to ask, when would you break? what would have to happen?
At the end of the day, launching a start-up is an exciting commitment that requires hard work, dedication and passion. It is not only a great opportunity to get financially rewarded, but also to fulfil our desire to create something innovative and successful. The rewards are many and the possibilities are endless, but be wary of the potential impact prior to taking that step. Know exactly what is your exit strategy? what is your fullback option? how much money will you lose or are willing to lose?
Key Summaries:
Start-ups are hard, the Founder Life is hard. You will most likely fail & it will hurt. Money will be tough to come by for a while & this will also put pressure on your friendships, relationships & long term goals.
The question & article is not about dissuading you but making clear that are you in the position right now to do this? is the risk worth it? Are you emotionally ready?
If the answer is yes, then there is nothing that can dissuade you.
