Over the years, I’ve had the opportunity to create multiple businesses and products. Unfortunately, it was years of hustling and failures before I managed to create a 7 figure business. There is a saying that you “do not know what you do not know” and this holds particularly true in my case.
Below are some of the things I’ve learnt along my startup journey. It is my hope these lessons will help you navigate away from my mistakes, and allow you to fast track your own successful venture.
#1 – Understand your market sector
Researching the market is key to any startup venture. You need to understand how big that market is, where it is heading, and what problems exist in that industry. Doing so will significantly increase your chance of finding a suitable market-fit for your product or service.
The more knowledge you have about a particular market segment – the better you will be able to develop a solution which solves problem points. And this will set the foundations for the creation of a thriving startup.
When considering the market sectors you want to enter, look at your own relevant background experience and interests. Have you worked in retail before and can see some ways it can be improved? Or maybe you are in fashion and see something which annoys you that has not yet been solved.
Sometimes the most successful products and services were born out of peoples frustrations with certain things that could be improved in their day to day jobs.
Be mindful that you will be likely spending the next few years living and breathing in the market sector you decide. So take time to know and really understand that market before committing to it.
#2 – Know if you are addressing a B2B or B2C market
While probably beyond the scope of this article, these terms will hold the keys to deciding on the direction you will take and the strategies you will employ with regards to marketing and distribution.
As a primer, a business-to-consumer market (B2C) is focused on a product or service that addresses consumers. Think of this like your local supermarket, which services thousands of customers every day. While a business-to-business market (B2B) focuses on products and services to address the needs of other businesses – think of these as the wholesalers who supply those fore-mentioned supermarkets. To confuse things even more, some companies can actually be both – but generally, they start with one or the other at least initially.
But why does this even matter? It matters because you need to understand where your source of revenue and cash flow will eventually come from. Are you going to end up charging the customer or other businesses? Investors, in particular, want to understand which market you are targeting – as this will directly affect their risk model and how much investment you may require from them.
As generalised examples, you will find a B2C business primary objective is to grow and secure market share. So to achieve this, they will often raise a more significant amount of investment with the intent to “burn” (or spend) this quickly to grow. In this model, cash flow and revenues are not as important as growth. With the view that once they reach a critical mass of users, they will figure out how to generate revenues through their acquired customer base. Facebook is an excellent example of how they ran at a loss for the longest time before finally turning a profit.
A B2B business, on the other hand, is more focused on cash flow as their primary objective. They would prefer to grow at a more sustained level with positive cash flow than purely burning capital or investment. If they do raise investment, it is primarily used for growth purposes and to solidify their market share within that niche.
Overall this type of businesses tends to have greater longevity while giving up less equity in raising funds – due to the constant cash flow and reduced risk to the investor. Atlassian is a prime example of a billion-dollar startup which has utilised this model with great success.
Taking time to understand whether you fall into a B2B or B2C model will allow you to plan how you will eventually earn income. This projection will avoid a situation where you end up spending significant capital or investment going down a particular business path only to realise there is no market willing to pay you for your product or service.
#3 – Find complementary co-founders
They say that being co-founders in business feels a lot like a marriage – and from experience, this is entirely true in every respect. You will often spend more time with them than your own family and friends. So it is imperative that you choose wisely and find someone you can get along with and most of all trust.
But can I also do this alone? I hear you ask. Absolutely.
A solo founder who has achieved this successfully is DropBox founder Drew Houston. But generally speaking, the chances of succeeding are far greater with two or more co-founders. From my own experiences, entrepreneurship can be a difficult road, and you need to be mentally tough to keep going. Sometimes it feels like a roller coaster ride with extreme highs and lows. It’s during these times it helps to have someone who truly understands what you are going through because they are going through it themselves.
Whether you decide to go it alone or team up with a few people, reports suggest the ideal number is between 3-5 founders. But if you are on the higher end of that range, consider going with an odd number to avoid situations where there is ever a stalemate in executive voting.
When deciding on your co-founders if possible, try to find co-founders that complements your skill-sets, so there is no overlap.
What do I mean by this?
If all your co-founders have very similar skills and strengths, it can actually work against you and become counter-productive. It would be far more beneficial if there is a diversity of skills in the critical areas of marketing, operations and technology. The reason? So that the focus and perspectives that each of you bring to the table will bring strength to your startup’s profile and inherently increase your chances of success.
Keep in mind that Venture Capital firms, incubators and investors will always look for solid founding teams with a diverse range of skill-sets that complement each other. Most often at this early stage, the dynamics of the founding team will have the most weight in deciding if you get accepted into that incubator or get offered that investment.
#4 – Research your competition
Who are your direct and indirect competitors?
“But I’ve found a niche! There are no competitors” … I hear you saying.
This is a common question asked by incubators. If your immediate answer is you have no competitors – you better be making something no-one has done before like a time machine!
There are countless times when people have approached me saying there was this new idea which no-one has done before. However, it is generally rare to have a completely new unique idea that no-one has attempted to build. Keep in mind, this is not to be confused with taking an existing idea and modifying it to a different market or country – as this has been done many times with success.
As an example, let’s say your friend came up to you and asked you to join their new startup that focuses on search engine technologies. It would not be wise on your part to join them without first doing proper market research.
You need to understand the competitors in that market, how large and how well funded they are. Sometimes the market is so mature that it would be increasingly hard to break into this without an immense level of funding and a lot of luck.
I remember a time when we were making leaps into the digital payments industry. Each day there would be a barrage of attempts to squeeze us out by competitors who were already in that space.
These large companies would purposely run at a loss in one area, but they would offset this with gains in another area they were already profitable. In this way, they could drive out any new competitors to the market with a lower price, steep discounts or freebies to maintain their market share. Uber is one such company that does this with great effect.
Taking time to research your competitors will be critical to your success. So make the right preparations and come up with a solid strategy and plan to address these ahead of time.
#5 – Adjust your mindset for the long term
Don’t be fooled by social media into thinking that startups are easy and success will happen overnight – because this is not true for a majority of the cases.
Building a successful business is hard work, and the entrepreneurial lifestyle is just not for everyone. Having the right mindset will significantly increase your chances of success as you can prepare and pace yourself for your upcoming journey.
Someone wise once said the definition of an entrepreneur is the “ability to withstand pain for a very prolonged period of time”. And from experience, this is completely true.
The best way to think of this in practice is to imagine you are embarking on climbing to basecamp on Mt Everest. Aside from packing the right equipment necessary to get to the destination, you also need to prepare mentally for the journey and unknowns that may lie ahead. Applying these same thoughts and patterns to business will set the right expectations as well as prevent you from burning out.
You may experience extremely long hours and late nights with little to no pay. Or be responsible for every single role until a time you can afford to fill those positions. The people you thought would support you may drop away. You may get faced with constant criticism which only intensifies over time.
You may need to put yourself out there and ask people if they would consider buying your product or service. And they will say no – many many times. But do not let this discourage you – even the most successful brands we know today went on this same journey when they started. Did you know that Starbucks founder Howard Schultz made pitches to 242 potential investors, 217 of whom said no? (1). Or that Walt Disney was rejected by banks 300 times because they thought the idea of Mickey Mouse was absurd? (2)
It will not be an easy road – difficulties will come. This is why it is imperative that you set your mindset for the longer term – the final goal. Because as time goes on, you will often find more excuses to quit than to persevere.
#6 – Avoid being a perfectionist
In the early stages of any startup, speed is more important than details and “execution” is king.
There needs to be a minimum acceptable level required to move forward, and you should push towards this target as quickly as you can. The most under-rated advantage of a startup is its speed and flexibility. But if you can’t get there faster than a larger company who already has the funding you may have already lost.
I can remember teaming together with a group of friends to start a project that on the face of it had a reasonably good chance of succeeding. The timing was right, there was a real market need for that product and innovation in that space seem to be lagging. Furthermore, I’d known these two individuals personally over many years, and so there was already trust and communication.
But due to experience levels, it was evident that we saw things from different perspectives and perfectionism crept in. There was a lot of execution errors that could have been improved with hindsight. For instance, we spent over six months on debating and re-designing the look of the logo among other non-critical things. While all the time, distribution and marketing were neglected because the logo was not right – and did not create that expected market appeal.
It is no surprise that we ended up getting that perfect logo. But the product never got its feet off the ground despite an MVP (Minimum Viable Product) already developed and out to market. Our mistake was we allowed perfection in one non-critical area of our venture – be a detriment to the success of our venture overall.
It is essential to realise that you are not able to build a perfect product from the initial launch – do not delay launching for the sake of perfection. Not even Facebook got it right the first time. It was only through trial, error and iteration they were able to build a product that has over 1 billion people on it today.
#7 – Execution is always key!
An idea without execution is nothing. There is no better day to start executing your vision than today. If Facebook, Twitter or Instagram delayed their products – you may have never heard of them. They were successful because they executed and started their products early when the marketing timing was right.
Now, you may be thinking that market timing is a bit of a two-edged sword – and that is somewhat true. You can only really tell with hindsight. But the secret of entrepreneurship is you will not know if you do not start.
I’ve often had people talk to me about building their personal product or website. However, years later, they would still be at the same point they started – at the beginning talking about how they want to start.
You need to take active steps each day to ensure your vision comes to fruition. Start that website or build that Minimum Viable Product (MVP) and get this to the market as soon as possible and keep iterating. It does not need to be perfect or entirely functional, but it just needs to be out there in the real world instead of just existing in your mind.
The important thing is to start and keep progressing. Then when you look back in a few months you’ll see how far you’ve come!
In this article, I’ve shared my experiences on the seven key lessons I’ve learnt from my own journey into creating a 7 figure startup. I’ve shared some successes but also many more mistakes I’ve made along the way. I am always open to conversation, so feel free to reach out to me to chat about anything and everything.
See you on the other side!
– Jeff Chin