Off to the Races, Part 2
The initial installment of “Off to the Races” introduced the simultaneous races against Burnout, running out of money, market dynamics, and your competitors. This installment focuses on Burnout, what causes it, and how to avoid it. If you’ve already read my series “The Journey,” you’ll recognize many of the concepts I’ll touch on and how they relate to Burnout.
The race against Burnout will test you in every way imaginable. What causes it, and what can you do to avoid it? Stress causes Burnout, and procrastination causes Stress. Harsh but true.
Whatever your reasons, you’ve decided to put everything on the line: emotions, personal finances, relationships, reputation, and your future in hopes of meeting your goals. You have every reason to be stressed, just like every successful founder before you.
What drives stress?
- Not being clear on why you’re doing this
- Stepping well beyond your comfort zone
- Not knowing how to approach investors
- Saying your market is enormous, but you can’t clearly describe your target customer
- Being chronically low on cash
- Your relationships are suffering
- You don’t know what to do next
- You begin to panic
Do any of these sound familiar? If so, you’re procrastinating.
- You have a zippy logo but can’t clearly articulate your value proposition
- Your website is live before you have anything meaningful to say
- You’ve collected 200 articles that validate your big idea, and you’re still looking for more
- You can’t describe your target customer but somehow know the market is huge, and you only need 5% of it to succeed
- You entered an online pitch competition, but no one asked a follow-up question
- You have a hard time explaining how you’ll make money
- You’re in motion but not moving forward
If any of these describe you, it’s time to stop, regroup, and think about how you’re going to move forward. You can let stress paralyze you, or you can quit procrastinating and get to work.
If you’re starting with nothing more than an idea, you’ve got more work ahead of you than someone with prior startup experience. Even they have fears of things beyond their comfort zone, but they mitigate them with an action plan based on data, industry-specific knowledge, and market expertise. If you have a false sense of confidence or a bad case of confirmation bias, you’ll know early in the race, hopefully before you run out of time or money.
Two key mindsets separate founders that succeed from those that crash and burn:
- They think in terms of the problem they can solve and not a solution looking for a problem. They know ideas alone don’t mean much unless they solve a problem or fill a need.
- They accept they lack specific information and expertise but proactively develop an action plan to mitigate the gaps as they surface.
These mindsets allow them to lay the groundwork for future success and avoid dead ends by anticipating what lies ahead. Life is a lot less stressful when you know where you’re going and have mapped out the fastest and most efficient route to get there.
Let’s define the first lap as getting to the starting grid and ending by securing seed capital from an Angel Investor. It’s a starting grid because if you’ve identified a real problem, don’t assume you’re the only one working to solve it or competing for capital. If you don’t think you have competition, be sure the problem exists. Embrace competition – being the first entry in most markets, especially as a small, thinly capitalized entity, puts you at a disadvantage. First movers face high R&D costs and require costly marketing programs to convince customers they need their product. Second-mover companies often capture greater market share with lower sales and marketing costs because they know the market exists and can study what worked and didn’t work with their competitors.
At this point in your company’s evolution, your objectives align with your investors. You both want to move forward with confidence by understanding your environment and planning to deal with it. You’d want this even if you didn’t need an investor. All founder stress boils down to not understanding your environment and not being confident in how you’ll move forward. Don’t initiate an investor discussion without answering the questions haunting you today.
Know what you want from starting your business. If your goals are to be the boss, get rich, and make a name for yourself, understand that those result from doing something well. They aren’t strategies.
Accept these realities:
- Your customers and investors aren’t interested in solving your problems. Customers want you to solve their problems. Investors want you to grow and generate a return.
- You can’t define your target customer without deep knowledge of your available market. Try describing the problem, how big it is, what pain your customers are experiencing, and how they are currently solving it without referring to your solution. If you can’t, you don’t know the market well enough.
- Your competition isn’t limited to other companies. Your most significant competitor is the way your customers are currently solving their problem. To get them to switch, your solution must be materially better.
- Customers need a clear explanation of why they are better off with your product. Your feature list isn’t an effective way to convince them. Your features are the tools you’ll use to deliver the solution. An advantage to them is lower cost, speed, reliability, and ease of use.
- Without a clear business model, you can’t describe how you’ll make money with your solution and why customers would buy it. Your business model also defines the knowledge and experience gaps you’ll need to fill. You’ll typically have the same five options to fill a gap; add a cofounder, hire an advisor, engage a consultant, become an expert yourself, or hire an employee. Hiring at this stage is the last thing you want to consider. You want to move forward quickly without accumulating high fixed costs.
Your next steps are to:
- Validate your market through research and discussions with potential customers. If not enough people have the problem, you won’t have a business.
- Describe your market and target customer without referring to your solution. Doing so will likely identify improvements to your current offering and simplify your solution.
- Document why you are starting the business. It will help you stay focused in a sea of distractions. Include an honest description of where you are today.
- Accept that you don’t have all the skills and expertise needed to succeed. Take an inventory of what you bring to the business and take comfort from having an action plan to address the gaps.
- 5. Design a business model that delivers your customer value proposition as well as your personal objectives and operating approach.
- Know your environment, including viable options for funding – only a tiny percentage of companies ever go public.
Reduce stress by becoming the expert, confirming your product/market fit, and developing a plan to move forward. You’ll increase your chances of landing customers, attracting investors, accelerating your program, and keeping Burnout in your rearview mirror.
The race against market dynamics: Is your market big enough, is it changing, and is this the right time to start your business.
Off to the Races Series
- Introduction (Part 1)
- Burnout (Part 2)
- Market Dynamics (Part 3)
- The Race against Running Out of Cash (Part 4)
- The Race against Competitors (Part 5)