Start-up Founder Litmus Test – Are you going to suck or win as an entrepreneur?

Back in school, you must have learned about litmus test. A simple test to determine if a liquid is acid or base. When dipped in the liquid, blue litmus paper would turn red if the liquid is acidic (and vice-a-versa if the liquid is basic).

Today I want to share a similar test to see if you can fight-it-out as an entrepreneur.

First go ahead and take the test. Answer each question in Yes or No.

  1. You spend at least 75% of what you earn.
  2. You are shy to ask for money for your services.
  3. You want to do everything yourself.
  4. You think you can outsource everything
  5. Your idea of success is yachts, beaches, cars, drinking & lavish life.
  6. You think earning $1 million is easier than borrowing $1 mn.
  7. You do not believe in yourself.
  8. You are waiting for the perfect idea to start your company.

If you have answered 5 or more with YES, your life as an entrepreneur is going to be tough. If you answered 2 or fewer questions with YES, then you have right mindset to become an entrepreneur one day.

How did I fare in this test, back when I started (in late 2009):

1. You spend at least 75% of what you earn:

No. I used to make Rs 40,000 per month after taxes. That is about $1000. Jo (my wife) used to make another $1000. Total earnings: Rs 80,000. We used to spend Rs 20,000 per month –

  • Rent: 8,000
  • Groceries: 4,000
  • Utilities (electric, maid, water, cable, phone, internet): 3,000
  • Petrol (gas): 1,000
  • Everything else (eating out, movies, travel etc.): 4,000

So that is 25% of expenses.

Note: The expense ratio is higher when we traveled aboard for work – mainly because other countries are costlier compared to India.

Why this is important:

Running a family is much like running a business. If you are not able to manage income & expenses in your family (and leave balance profit) then you cannot manage a company. I am not saying all start-up founders need to be frugal. But you need to be wise when it comes to money.

2. You are shy to ask for money for your services

Yes & No. Initially I was shy to charge money for my services. But during 2008, I became confident. This helped me launch my first product in 2009.

Why this is important:

Starting something is like going against a tide. Unless you value yourself & ready to ask, no one will give you anything.

3. You want to do everything yourself

Yes & No. As you may know, I used to do all aspects of my business in 2009 & 2010. That is content creation, marketing, customer service, product development, website maintenance, email, phone support – everything. This has 2 reasons – 1) I did not want to spend money on things 2) I liked doing most of these tasks.

But my approach changed drastically once the business grew. In 2010, when I quit my job to work full-time on Chandoo.org, I already knew that I will be hiring my first employee very soon.

Why this is important:

If you want to do everything yourself, that is an indication that you are a control freak. Sooner or later your employees will hate you for that and your start-up will have troubles. A successful start-up must have good collaboration between all the employees & make them happy.

4. You think you can outsource everything

No. I did not consider outsourcing until 2011. Even today, I do not think I can outsource all aspects of my company.

Why this is important:

If you think you can outsource or hire others to do everything, then you become a free-rider. Someone who enjoys the benefits, but does not contribute much. No matter how brilliant your idea is, unless you fold your sleeves and work on it yourself, you will not get respect from your team. Also, as a founder it is important to understand all facets of your company by working in all areas at least a few times an year. A good example is Zappos, which requires that all employees must work in customer service for sometime before doing their actual work. Imagine how different an accountant, software engineer, production manager will be once they talk to customers on phone for a week.

Related: my thoughts on outsourcing

5. Your idea of success is yachts, beaches, cars, drinking & lavish life

Never. My idea of success is freedom, happiness, family, comfortable life, wanting less & health. I do not mean all the founders should be like saints and say no to luxuries. But, if your sole ambition is to life a lavish life, then starting a company might be a poor idea.

Why this is important:

Focus on specific items or luxuries can yield to poor decisions when running a company. Instead start something because you want to help others or create value.

Related: Follow your passion, but manage poop too

6. You think earning $1 million is easier than borrowing $1 million

No. I think the opposite is true.

Why this is important:

Understanding the concept of leverage and using it is very important for a start-up founder. If you have a great idea and execute it well, then $1 million in your hand can become $10 mn in no time. All good bankers and investors know this. That is why borrowing a million is easier than earning one. It becomes easier when your company spends less that what it earns (ie profitable) and you are not shy of asking for money.

7. You do not believe in yourself.

No. Einstein said, “Everybody is a genius. But if you judge a fish by its ability to climb trees, then it will live its whole life believing that it is stupid.” Although there are various things at which I suck (sports, social gatherings, dancing etc.), that is no way stopped me from starting my company.

Why this is important:

As I mentioned earlier, staring a company is like going against tide. You have to fight everyday with competitors, peers, society & more to earn recognition & your place. Unless you have confidence in you, you cannot do it.

8. You are waiting for the perfect idea to start

Never. When I was doing MBA, I thought to succeed a start-up must have a killer idea. But that belief died once I started working and spoke to more people. I now believe that any decent idea can become a successful startup, as long as we execute it well.

Why this is important:

In many fields like physics, brilliant ideas are important. But not in the field of making money. You need guts more than brains to succeed as an entrepreneur.

 

The best thing about this litmus test

Once tested as an acid, the liquid remains acidic no matter how many times you test.  The best thing about our test is, you can pass it once you change your mind-set & hobbies. You will also notice that I have not included any questions about risk taking. This is because, I think having a full-time job is just as risky as starting something on your own. So go ahead and clear the litmus test. Start something and leave your mark on this world.

How did you fare in this test?

Please share your results and ideas. Do you agree with this test? Leave comment to share your opinions and ideas.

20 thoughts on “Start-up Founder Litmus Test – Are you going to suck or win as an entrepreneur?”

  1. Hi Chandu,

    I’ve been doing internet marketing full-time from the past 8 months. Along the way, I have learned many things through experience.

    Obviously i got very few Yeses In fact they are more like work in progress. Which will become NO in the future.

    If i had to answer these questions a year back or so, I would have answered many NO’s..

    Thanks for inspiring people like me with your blog. And an article about you on pagalguy is what made believe it’s very much possible to make money online legitimately..

    Mohan

  2. Chandoo,

    As always, extremely motivating post. I’ve been an avid follower of Chandoo.org for at least the past 2 years. That led me to this blog and I absolutely love the information you share. Please do keep up with the posts to encourage us all.

    Looking at your journey encouraged me to get started with my startup a month back and I look forward to creating value for others.

    Best,
    NG

  3. It’s really nice one, I did this test and scores with 2 yes. Among this one yes is, begining yes and then no. It really boost me to start with the idea that I want to explore.

  4. Chandu,

    Thanks miln for the tips. I’ve undergone part of the test, but have failed miserably in most, though not as listed. Am in a land of opportiunity, and am inspired to take it very seriously (as a hoby).

    Is age an barrier, is the question I would like to ask – or late is never too late..

  5. hi am going to start an online business as i have had a hard site business before. i tguess that you need so much computer saavy and hardware which i dont have. i am very motivated to learn and need guidance as to what hardware i will need to start an at home business. the computer knowledge i am getting by taking classes at the local library. are there specific softwares i should know? i am taking excel powerpoint are there others which will be necessary in running an online business? please help i would greatly appreciate any words of advice you could offer. are there groups or people like me in New York City i could network with? much success to you and thanks

  6. Love your test. Have got Yes in Q1 and Q4 and NO in the rest. I am pretty sure my Yes in Q1 is because I have just started it now and the money is rather invested/spent in learning more new things.

  7. Hi,
    I am dheeraj,right nw i am working for some company ,I am thinking of starting my own venture and i am in a confusion about picking up the best idea to startup but your article made me understand the situation thanks for your article.I got 2 YES which made me more confident.

  8. All makes sense Chandu!
    Sooo, what is the value of your business this morning, if you were to sell it to me right now?

    Keep up the good work man!

    Regards,
    Debasish 🙂

  9. Hi,

    This is great information, I would love to get some advice from you if you can share your email id here. I am planning to start something soon. The results of my litmus test are
    1. No 2.No 3. Yes & No 4.No 5.No 6.Yes 7.No 8. Yes.

    Please share your contact info if possible

  10. Nicely written. Thank you Chandoo. I came to know about your web couple of years back. I was working in excel and my fellow worker was too excellent in Excel and he helped me a lot in reducing my work. He suggested your website. I subscribed to your web and could not follow it up as I left the company soon after that.

    Anyways, I never thought excel could be useful in another stage of my life. I took your lessons on different sections and I m impressed with your blogging. its very unique. My web is not complete, so you would understand what exactly it is all about. Basically it is an online business directory specifically for construction. I started this in my own local town. Looking forward for your excellent lessons. Thank you once again for teaching me Excel. I m below avg user.

  11. Well said. I taught at home at the beginning and had a meagre revenue, insufficient to provide everything for my family. Now I have a place which I hire to teach and my revenue is satisfactory. Guts self-confidence are important. The litmus test is a right thing.

  12. Boss, You are simply ..very simply ..very very simply awesome boss. I am struggling for the last one year and waiting for a fantastic idea. But you cleared the air by saying – “a decent idea is enough and all you need is excellent execution” “you need guts more than brain”
    I loved the transparency levels, teaming up efforts and above all letting us know simple lessons of life. I also have a similar idea (building on a forum for helping people foster their work abilities). Thanks for the inspiration bro.
    You left your mark in my life bro. One day we will surely meet. Thanks for this.

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