If you’re thinking this is the year to launch that start-up of yours, you’ve probably watched countless interviews of successful entrepreneurs hoping to get a good dose of inspiration.
Well, here are 10 tips from a business lawyer who sees start-ups flourish and crumble all the time.
1. Have balls
If you aren’t sure why you are doing something, don’t do it. Having your own business means making hard decisions fast. It means weighing up all the risks and rolling the dice. The most successful start-ups quickly learn all of their risk factors, be it consumer, regulatory or competition, and come up with a strategy to forge ahead.
Educated gambling takes balls. If you like to wait around and ask mom for advice, then you may be better off not being an entrepreneur.
2. Don’t be afraid of crazy ideas
When I ask my clients what their business idea is, I sometimes struggle to keep a straight face. I remember a couple of young guys whose whole business centred on flatulence.
Well, why not?
Those entrepreneurs crazy enough to think “if I reckon it’s a good idea, others will too” laugh all the way to the bank while doubters continue to doubt.
3. Difficult conversations come first
He might be the world’s best wingman, but when he won’t get out of bed on Monday morning the fun ends pretty quickly. Whenever I hear a client say things like “I don’t really trust him” or “he isn’t pulling his weight”, alarm bells ring. A good start-up partnership will have the difficult discussions early on.
What is expected of each person? What will each person get? And most importantly, what happens when someone doesn’t pull their weight or just does something plain stupid? Trust me, stupid happens more often than you would like to think.
4. Put it in writing
I have lost count of the number of times I have heard people say that they have agreed to something but conveniently one party has changed their mind, and no surprise, it’s usually about money.
Doing business by handshakes and on word is a sure fire way of creating tension and distrust. Save the arguments about whose foggy memory is correct by having everything in writing.
5. Get expert-ready
You may have created a fool-proof timeframe for getting your product to market, but you forgot one thing – lawyers, accountants, developers and others may not work to your timetable or may charge you extra for the “urgency”.
Avoid frustrating delays and cost blow outs by ensuring that you have the right external team on board from the beginning who can help you plan what you need within a timeframe that works for you. Understand the process and where delays may occur.
Be on the front foot, and don’t miss the market because you haven’t given others enough time to do their job.
6. Budget for Professional Advice
The old adage you have to spend money to make money couldn’t be truer.
Spend a little now and save a lot later on. If you think lawyers are expensive drafting agreements, just wait until you see how much they will charge to dig you out of the hole you got yourself into!
You don’t need to spend a fortune early on, just enough to know your risks, protect yourself where possible and get off the ground.
7. Don’t Cut Corners
Yes, there probably is a quicker way of doing things, a cheaper way, and with the internet you can probably just copy someone else right? Wrong.
You know the saying “if you aren’t going to do it right, don’t do it at all!” True entrepreneurs don’t build an empire on quicksand, and they know that copying the competitor is cheap.
Sure, you don’t need to reinvent the wheel, but at least design the wheel the way you want it.
8. Build a Team
If you are going to take on staff, make sure you know what your obligations are. From the minute you take on someone you are exposed to OHS issues, WorkCover requirements, superannuation and tax. Know your obligations up front. Is there a better model to work under? Have you thought about consultants or contractors, and virtual assistants? I cannot stress this enough, protect your intellectual property from your staff and in turn from your competitors.
Do you know what the the KFC secret herbs and spices are or the recipe for Coke? No? That’s because those companies have done this one little thing right for a very very long time.
9. Plan your Exit
From the moment you enter business you should know your exit plan. It might seem a funny way of thinking but it will shape every single decision you make on a daily basis. Getting out is your goal, getting out with money in your pocket is the dream. There is no shame in trying and failing. If the business isn’t working, and you have given it your all, then walk away. Do not throw good money after bad to prove a point or save your ego.
Hold your head up high and move on to the next opportunity. The biggest disputes and the biggest losses are suffered when people are too stubborn to move on. Don’t be “that guy”!
10. War Stories
Did things go wrong? Great, tell everyone who will listen because I bet they have just as many war stories to share with you. And guess what, you will learn from, or at least laugh at, each and every one of those lessons. If you don’t have any war stories yet, brace yourself!
Jade Lattimore is an experienced business lawyer and the director of Greenstone Legal, a law firm with a focus on startup businesses and an artillery of war stories to share.