10 important things to know as an entrepreneur- in conversation with John Lipe
Everything you need to know if you are an entrepreneur or aspire to be one!
What are some of the most common mistakes made by first-time founders?
How to choose the right co-founder? What are some of the most common legal issues?
Should you bootstrap or dilute your shares in the initial stages?
John Lipe, Head of Business Strategy & Client Relationships, CEO — Black Label Global, talks about some of the most frequent queries related to startups and shares some important tips for entrepreneurs!
Q. What are some common mistakes first-time founders make during initial stages?
I have personally worked with hundreds of startups at this point, many of those relationships have been with the actual founders so I have a close relationship with many of them in the early stages.
Over time, several themes and patterns have emerged on this exact point. One of the biggest issues I have seen from first-time founders is this emotional attachment for perfection.
What I mean by this is simply that people who start their own business or venture tend to be emotionally invested in it, and they also have a false idea of achieving perfection. Perfection is an idea, not a goal.
Launching is a goal, getting 100 users or sales is a goal, updating a user feature is a goal. Perfection is an unreachable ideal, and it causes businesses to become paralyzed instead of progressing forward. I have seen entire budgets blown and months wasted on super small items that have no real bearing on an actual launch of a business.
Buttons colors of some sub-page buried ten clicks into a site is irrelevant if you have no users, or zero traffic— or in some cases, haven't even gone live yet. As you progress, you have to think of everything as steps.
Focus your time and energy on the most viable parts and get it out there. You have to mold, adapt, and change over time, and that's the point. That's what a business is; a living, breathing thing that grows and changes over time. It will never be perfect, it can only become better (or worse).
Q. How important it is to have a strong core team initially?
The team should be strong, but lean. Bloating your team out without revenue is a great way to fail. Rely on who you need and skip the ones you don't. Move fast, swift, and strategically.
An issue I see is people hiring too many people at first and what I like to call LARP-ing as a business. This is when someone has an idea and then calls 20 people and tells them about it, tries to convince them to come on board for a percentage of equity, and then nothing ever happens.
The founder then begins hating their friends or people they brought on, instead of realizing they had no real plan, and definitely had no execution.
The truth is this— hire who you need, not everyone you think you want. Keep it simple. Don't blow budgets, and don't promise equity in something you don't have yet, because that motivates no one.
Q. How to choose the right co-founder?
Yeah, I have had partners before, and currently, I don't. There's a reason for that. The truth is, everyone is different. So, how to find the right co-founder FOR YOU is probably the best way to ask this.
Do you tend to think high-level? Then bring on someone who can be granular. You know how to develop? Bring in a brand expert who can visually sell.
The idea is to partner (or hire) those who compliment you, who cover the gaps you have already. Of course, that takes knowing yourself just as well too.
Q. While onboarding the first investor, what are the things to be cautious of?
If the investor has never invested, and you've never taken investment, get a lawyer. Other than that, always take multiple offers. If you have no other offers, then what do you have to lose?
I think people tend to not see the bigger picture when it comes to investment. I often talk about this in reference to the show Shark Tank, when people do their pitch, get offered millions for 40% of the company, and then they actually have to take a sidebar and decide if 40% is too much.
You're in no position to even consider this question. If the money will get you to where you need to be, then it's more than what you have now— which is the reason you're looking for investment anyway.
People who debate aspects like these, especially thinking real life is like Shark Tank and they need to somehow emotionally own part of their business, I personally believe they have no idea what they're doing. Once you get a budget, you get exposure, and in ways that you would never have had before. What exactly is there to think about?
Q. How to set the right KPI according to your industry?
Research. Just because you're in a specific industry doesn't mean that you know what everyone else is doing. You may have a good instinct and experience on your market, but until you pull in a group to get you data that you can actually make insightful decisions on, you're just guessing.
Do the research, look at the data, see what your competitors are doing, and the most important part— take your ego out of the equation. (Shameless plug: we can do this and we're really good at it)
Q. What are some of the most common legal issues?
The way you structure your business is very important. There's a reason why the more complex setups are better, ie; S-Corp vs LLC.
Look into which is best for you and your business, do your due diligence on it, and then hire an expert to do it properly for you. If taxes fall under legal issues (I would consider them to), then make sure you understand how you can save money on taxes, how to set up payroll, and accounting properly. And, do it right from the beginning.
This may sound expensive, but you can simply hire an accountant for a 1-2hr consulting Q&A to get 90% of this information. Just do it, it's worth it.
Q. Should an entrepreneur bootstrap or dilute his/her shares in the initial stages?
This is the advice you probably won't get from other people in this industry.
I have run 5 businesses in a span of 16 years now, and I have 100% been self-made and bootstrapped for all of them. My firm belief is that if you can't make a profit with a $5,000 budget, then you won't make a profit at $50,000 or $500,000.
You need to bootstrap in order to understand how to actually make money. This strange trend of "startups" going for investment without actually making any money blows my mind.
Also, as an investor, why would I give you money if you haven't made any? If you can profit at a bootstrap level, then you have a better chance of being positive when you get investment.
Q. How to know if it's the right time to expand?
Can you afford to expand? Have you run an analysis on ROI on expanding? When you can answer yes to that, then you have your answer. Data is crucial in making decisions.
Q. How to prepare for rapid expansion?
Have the right people in place, and know where you're going. Having said that, you need to focus most on the next step. Even though it's important to know where you are going, and how you're going to get there, don't try to solve for Step 8 when you're at Step 2.
Focus on that next move, make it, and then move on to the next. If this happens rapidly or not, the fact remains that focus on moving through what's immediately in front of you is key. This is what progress means.
However, don't ignore the rest of the steps, you can simply follow the 80/20 principle on this; 80% focus on the next step, 20% focus on what the steps ahead are.
Q. How to know it's time to pivot in order to survive?
If you're in a place where you are thinking about surviving instead of thriving, then it's time to pivot. What's your bottom line? Are you bleeding out every month? How many months do you have until you're out of budget at this rate?
These are questions that you as a founder should always know the answer to. Then, ask yourself and your team, why? Why are we in this position?
If the answer is something outside of your control, then pivot to a plan that is inside your control. Build a plan that has a foundation in being profitable, and take the next step.
Ideas are easy, Implementation is Hard, learn from the ones who knows how to start. A Publication by Tealfeed.