Startups are romanticized, and sometimes it’s misleading for people who want to launch their own company. Mostly, stories about startups revolve around dropping out of university, from zero to hero narratives, and other quite fairytale-like ideas. At the same time, startups are indeed exciting and highly satisfying for their founders. The trick is to get prepared.
A founder needs certain skills and knowledge. Nobody is born a CEO or an industry leader, but you can learn the essentials. So, here are a few recommendations on what you should learn prior to launching a startup.
Entrepreneurs, especially newbies, tend to get taken away by their idea for a startup. Consequently, they may overlook highly important legal nuances or simply forget about them. Meanwhile, each venture requires sorting out an enormous amount of legal details. They impact fundraising, hiring, intellectual property rights and patents, and many more things around starting and running a business.
If a founder comes from a large enterprise, they may either know it all too well or forget about the necessity to look into legal details because at corporations there’s always a legal team that takes care of everything. A newcomer to the startup market may simply have no idea about all the nuances.
You can hire a lawyer or consult with one from time to time, but knowing the legal side of venture investment and running a company is essential. Even if you have a trusted lawyer or legal adviser, you still need to be able to read and understand legal documents yourself and identify questionable wordings in them, no matter how boring it may seem to you.
Also, it’s necessary to foresee where you may need some extra legal care. For instance, if you are developing a unique technology, you better patent it.
Oftentimes entrepreneurs-to-be don’t realize that being a startup founder means communicating a lot and with a crazy amount of people. So, pull up your communication skills before building your own business.
Usually a founder has nobody else to delegate the crucial communication tasks. Moreover, fundraising or inspiring a team should never be done by somebody else, because founders know the strong points of their company and its mission better than anybody else.
Founders need to be convincing, diplomatic, sociable, and empathetic. They should be able to explain the idea behind their venture clearly to a potential investor in a couple of minutes and find the right words for their team during tough times. Besides, founders often have to communicate with journalists or at conferences and meetups. A good founder is always a good communicator.
Business Models and Pricing
Know your business model prior to launching a startup. There’s a limited amount of them, which makes things easier because you basically need to choose one that suits your company without the necessity to invent a wheel. However, sometimes founders only think about their big idea and forget about the strictly business side of a startup.
Investors won’t consider your company as desirable if you don’t show them your business model or if they see that the chosen model may not be the best fit. Founders themselves need to know how they are going to earn money.
Pricing is something many founders struggle with because newbie entrepreneurs may set random prices for their product instead of calculating the proper numbers or calculating with finance professionals. Interestingly enough, some founders even shy away from charging for their product. Learn how others do it, listen to experts, and figure out your pricing policy.
A business should be measurable. Metrics help you identify if you are on the right path and they help to convince prospective investors to give you money. They are totally a must for pitch decks, without them investors won’t even consider you.
There are more than a dozen startup metrics that a founder can use. However, you don’t need them all, you need the ones that suit your business model. Figure them out, monitor them regularly, and compare the ongoing period with the previous ones to see if you are growing, declining, or stuck.
When you get funding, you need to monitor the burn rate in order not to go bankrupt or understand if you need to raise more money. When you pitch investors, show that your product is in demand by presenting the number of active users and its growth.
Startup is rarely a ship that sails through still waters. Huge competition, pivots, race for fundraising, unclear perspective, external uncontrollable crises, etc. There are a lot of things to be nervous about for both investors and employees.
Also, new ventures can be very intense and sometimes they require full devotion and some sacrifices from everybody involved. When things get rough, a strong leader can help their team to get through. Besides, a true leader always serves as a source of inspiration and motivation for those who work for them.
Leadership skills are essential for a founder who strives for success. A true leader is a visionary and a goal-setter. They know how to be flexible and firm at the same time and never shy away from responsibility. The good thing about these skills is that they can be developed, nobody is born with them.