Look before you leap

This is one of those post’s brought about by self-reflection. Over the past twelve or so months I have had the opportunity to interact and listen to many a soul who want to get into the start-up environment. I have heard everyone – from the naysayers to the happy-go-lucky types…. and from this learning (and some of their tears) have put together a few simple thoughts which you may consider before going down this path…

The best time to get into this type of business is typically:

• When you are in school – spend your time interacting, learning and interfacing with others. You really do not have anything to lose, and the upside is quite high. Worst case at the end of 1 – 2 years you will emerge from an amazing learning experience (with very little money), but a good resume.
• When you are very well settled – by this I mean you have enough and more saved up to take care of yourself and your loved ones for at least 2 years. Don’t kid yourself with the illusion that you can rough it out – without having either tried it out first, or having consulted your dependents. You may have no issues eating 1 Euro pizza and Ramen… not sure you would have a partner who is interested in going a similar route.

Now, for the rest of us who are not in these two categories here are some off the cuff tips (specially for Germany!)

1. If you have your first job, and even if you hate it – do not leave until you have completed at least 12 months in employment. Why? very simple – after 12 months you qualify for unemployment benefits…. helps getting something from the government rather than none.
2. Use the time in the dreaded job to actively examine the following
   1. Evaluate each fanciful idea you have – ask yourself if there is a real need for this, are you solving a problem that needs solving or trying to create a problem that doesn’t exist. The latter isn’t wrong… but well, awfully hard! Talk to people about it – better still, talk to your enemies. No better criticism comes than from those who despise you. Use the feedback to evaluate, improve or discard the idea. Next remember, an idea in itself isn’t bad or good – success typically depends upon how well you can execute upon the idea. Mediocre ideas will brilliant execution have an excellent chance of success.
   2. Search for methods of getting money – as a young start-up, you either have to raise cash by asking friends and family, or find an angel. The raw truth about angels is the fact that more often they tend to be vultures. Sure – they will give you money, but would extract a high price in terms of equity. More often you may soon find yourself more as an employee rather than the CXO! However, there are many avenues to get grants – some need a lot of digging and paperwork, which puts off many people. Don’t be deterred – and make sure you do your research, figure out the whole process such that when you are ready, you will know how to get it.
   3. Save up – you hate your job, and want to start something yourself. Plan ahead and save for it. Pennies count, and they add up. Investors too like it if you can confidently say that you have more than just sweat equity in a firm.
   4. Hire someone to do the ground-work. Well, if you need some analysis done, a website done etc – it costs money and know-how. Don’t leave your job just yet, but engage someone who can do it for you. That way you have cash coming in until the very point when you HAVE to dive 100% into the running of the firm.

This post may be contrary to many others who may advocate a passionate plunge into the fascinating world of entrepreneurship. But there is an often unseen side of it; of sweat, worry and tears. Some of you (and I hope there will be many to this list) will be lucky, be able to raise capital, have a stellar product and succeed – but most will not (and this is plain statistics). And for those, a bit of planning in advance will prepare them for this period. This does mean that you will most likely not be the star performer in your current job, but well – you aren’t putting 100% into it because its not something you want to do! Focus on your passion, make sure it is well thought through, saved up for – and dive right in. One thing is assured – survival will not be your biggest concern