How to survive the first 2 years of startup?

How to survive the initial years of a startup?

It has been 2 years since I quit my job to embark on exciting journey of my own venture. It has been one heck of a journey. Look at these numbers to get an idea on the amount of change in this two years,

March 2010March 2012
Number of customers100390
Number of employees (excluding me)04
Monthly revenue
(excluding advertising, INR payments, consulting fees)
$2,735$29,768
Customers from22 countries35 countries
Average sale value$27.35$76.32
Best selling product
(by quantity)
PM Templates (83 units)PM Templates (228 units)
Best selling product
(by $s)
PM Templates ($2565)Excel School ($12,132)
Most frequent first name of customerMark (4 times)Michael (8 times)
Total visitors to our site371k1,353k
Number of customers buying multiple quantities12 in all months of 201021 in all months of 2011
Refunds by year$42 in 2010$858 in 2011
Total RSS / Newsletter subscribers~ 9,000~ 40,000
Total comments467717
Total spam3,58930,164

So how did we survive the initial years? In this post, I will summarize the ideas that worked for us.

Make Mistakes

Just like the first 2 years of a kid (often first 31 years of a kid) the key to survival is in making mistakes. I do not mean dumb, repetitive mistakes. But the kind of mistakes that you make when you explore, when you learn, when you try, when you assume. Make more of those. These mistakes helped me learn new things about my business,

  • Mistake of doing everything myself helped me realize that I should get help and partner with more to be successful & happy.
  • Mistake of saying yes for everything made me realize the value of NO and simplicity.
  • Mistake of focusing on irrelevant things helped me see the importance of our goal – to make our users awesome
  • Mistake of doing too many things helped me realize the importance of focus.

Ask

There is a saying in India, “if you do not ask, even your Mother will not feed you.” Many startups focus on asking wrong people & ask for wrong things in their infancy. This leads to a lot of stress, discouragement & financial hardship in the early years.

I am glad I have,

  • Asked my readers to become customers & pay me for my products
  • Asked for help thru oDesk & similar channels & hired people
  • Asked leaders in my niche to collaborate & recommend my products
  • Asked my readers & customers for regular feedback
  • Asked my website visitors to join my newsletter, every single time they visit us.
  • Asked the most prolific commenters on my site to join us as guest authors & help us

Do

Almost all of us have ideas as grand as next iPad, Avatar movie or ikea store. But less than 1% of us have the guts to do anything about it. Startup founders are no exception. During the initial stages of a startup, the founders have grand vision & unlimited ambition. Often, this leads to planning paralysis. Founders spend months planning, designing & mocking up things that it delays the actual purpose of the company – to sell something & make money.

Although it has been only 2 years since I started my company, I have been selling products for more than 3 years now. But even after quitting my job, I did not loose focus on the core purpose of our company – to make our users awesome & make money.

Related: It is not rocket surgery, make your first $ already

Measure

No matter how much you ask, how many mistakes you make, how much you do, it all can go for waste if you do not measure. During the first few months of your startup,

We need not be obsessive about this measurement nor too detailed. Most of the measurement is automatic thanks to tools like Google analytics, Bank statements, time trackers & email analysis applications. So use them and make a rudimentary report every month. If nothing, just write down the metrics on a white board and hang it near your workspace. Update it regularly and you will have a clear sense of where you are heading and where you are failing.

Be Patient

A handful of patience is worth more than a bushel of brains

– Dutch proverb

We, startup founders tend to be impatient & anxious. We want the change, fast paced action and movement. May be that is why we did not fit in to the corporate environment and choose our own path. But this very nature can kill our startup in early years. It is very important to give our startup the time it takes to settle down & grow. Never expect immediate results or quick fixes in early years. Instead focus on laying strong foundation, good values, good processes & building teams that work well.

  • Do not expect your new store design, web site layout to be effective overnight.
  • Do not expect your product to make a million dollars in first week.
  • Do not pressurize your employees to perform from day 1.

All this does not mean, we should set our goals very low. Instead, we need to be realistic and give time for our startup to grow. Just like you do not expect your kid to walk on first day after birth, do not expect your startup to fly from first year.

Related: Follow your passion, but manage poop too.

How did your startup survive the initial years?

Is your startup more than a few years old? How did you survive the infant years? Please share your success story using comments. I am eager to learn from your experience & ideas.

Please comment.

Wishing our startups many more years of success & growth.

Dilemma – to grow your start-up or not?

First up, I am sorry for absconding this blog for a while. It is not that I stopped running a business. Instead, I got lost running it.

Today, I want to share an interesting dilemma I am facing and my thinking process.

To grow your start-up or not?

Thanks to the awesome customers and supporters, my little business has been growing more than 100% year on year since I started it. The best part of this growth is that it is organic. It feels great to know that we are getting new customers, new prospects, new ideas, new deals, new link-backs without spending any money on advertising, PR or marketing. But…,

With growth , you get extra work, people to manage and blurred vision.

So, as I am winding up the year 2011, the question of to grow or not is staring at me.

Growing a Small Business & Differentiating from Big Businesses

[original image from Robert S Donovan]

Just to give you a comparison, when I quit my job to get in to this full time (in April 2010), this is how my weekly schedule looked like:

  • Writing new content – 12 hours per week
  • Email & answering – 12 hrs
  • Reading & learning new things – 6 hrs
  • Customer service – 3 hrs
  • Product development – 3 hrs

After 18 months, this is how it looks now (November, 2011):

  • Writing new content – 4 hrs
  • Email & answering – 4 hrs
  • Reading & learning new things – 1 hrs
  • Customer service –  1 hrs
  • Product Development – 8 hrs
  • Phone calls & collaboration – 1 hrs

While it seems like I have been working less (36hrs per week vs. 19hrs per week) , much of it is due to restructuring my time & priorities. That said, I have been working more on commercial side of my business (product development) than fun side of it (writing, reading & connecting).

And this has been a disturbing trend.

So, I want to take a step back and see if everything we are doing aligns with what we want this business to be.

What do we want – Growth, Fame, Money or Something else?

When I started my business, I did not have any loft goals. It was just a means for me to do what I love (play with Excel, connect with people, make them awesome). But as the business grew, I have narrowed the purpose of our business.

We are here to make you awesome

We are doing this by providing online tutorials, help, products & consulting on Microsoft Office platform.

Well, awesomeness is a lofty goal. But there are 2 important questions.

  • How do we make people awesome?
  • How do we measure it?

How to make people awesome?

There is no single or perfect way to make people awesome. You are awesome when,

  • you are very very impressive.
  • you are inspiring
  • you are a rockstar, a hero, a ninja

So how do we take a total stranger on internet and make her awesome? Of course, by being awesome ourselves. This is how we try to make others awesome,

  • Share our ways of doing awesome stuff
    • Writing new content
  • Teach how to be awesome (or like us)
    • Training programs
  • Make products that are awesome (ie inspire, impress and make the user a hero)
    • Templates & Downloads

How do we measure it?

Although not perfect, I have a vague sense of how to measure it.

  • Number of people reading and benefiting from our articles & tutorials
  • Number of people joining our training programs and working thru them.
    • Feedback given by these customers about the effectiveness of the programs.
  • Number of people using our templates, tools & techniques
    • Total downloads, purchases, feedback left
  • Emails & thank you notes received
    • This is qualitative, but you get a pulse of things.

If our goal is to make people awesome,

If our goal is to Make people awesome, then naturally, we must grow to meet new people to make them awesome.

But if that growth compromises our ability to make people awesome …?

As I see it, by spending more time developing products & collaborating, I am not able to make people more awesome.

So here is what I am going to focus for next several months.

  • Writing new content
  • Restructure our website navigation & make it friendly new readers: This is important because even though writing new content helps us make people awesome, every day we get thousands of people land on our site for first time. And we want them to be awesome by not just reading new content, but also consuming older stuff. Currently this is not possible because of the difficult navigation.
  • Trimming our product line: In our urge to meet our customer’s needs, we have created a few products that are 100% awesome. So I want to spend next 2-3 months trimming a few of them. This will free up our time to focus on important things.

What are your thoughts on this?

The question of growth consumes any entrepreneur during the childhood of her start-up. To grow or to remain stagnant. While it may seem easy to remain stagnant, it is just as difficult. There are several natural forces trying to grow or shrink your business all the time. How are you addressing these and what are your thoughts on the growth question?

Please share using comments.

More reading

Follow your Passion, but Manage Poop too…

There is an interesting discussion going on at Unicorn Free. In the article, Don’t follow your passion, Amy says,

So. You’re in love with a thing. Let’s say it’s coffee, books, design, code or solving interesting problems. You decide to open up a café to follow your passion for coffee. Or a used book shop, because you’re passionate about books. Or, because you’re passionate about solving interesting problems through code or visuals, you hang out your shingle as a freelance developer or designer.

Six months to a year later, and guess what?

Turns out that you hate running a café (or book store, or…). Turns out that running a café is as much about the coffee as raising a child is about snuggles. Yes, the coffee happens — and so do snuggles — but what really makes up the typical day is very little sleep and lots and lots of poop.

Sounds indigestible for start-ups right? Afterall, if not for passion (and millions of $s), what else would motivate us to go thru the risk and separation?!?

If I was writing this post 2 years ago, I would have totally gone against Amy’s point. But after running a mildly successful start-up for 2 years, now I can see the point about poop.

In year 2009, I would have definitely said, “follow your passion”. After 2 years, I now say, “yes, follow your passion, but manage poop too.”

Let me tell you the most satisfying parts of my business:

  • I enjoy teaching MS Excel: I enjoyed the process of teaching MS Excel using blog posts, tutorials, short videos and products thru my sites. I can do the same for next 8-10 years.
  • I enjoy helping people: I felt great pleasure helping a commenter about a question she was struggling with or a person who emailed me his problem.
  • Running a website is fun: Running a reasonably popular website and connecting to world-wide community of Excel users & experts is so much fun.
  • I enjoy making money: I like the challenge of making a living out of my business. I enjoy the process behind successfully marketing my products, testing variations, learning from my mistakes and keeping my costs low.

Lets talk about the poop, which is a lot:

  • I hate manual steps in sales process: No matter how much automation I do, there are still a few things that must be done manually – like enrollment of students, setting news-letters, discount codes, product campaigns etc. etc. They seemed pretty exciting at the beginning, but after a while, I feel bored setting up or doing same things.
  • I hate email overlaod: As my site and business grew, so did the email and phone volume. These days, I get at least 40 emails from customers, prospects, strangers and fans. While reading and replying to the emails is fun, it also means I never get a break. Thankfully, I have learned to cut my email time and effectively manage the email load. But I have no idea what to do when the volume goes up 10x or 100x.
  • I hate legal / administrative procedures: Just as an example, I am in the process of setting up a payment gateway to accept credit / debit card payments from my Indian customers. This process is so ridiculous that if I start explaining it, it would be Christmas by the time I am done. For eg. They want me to read, agree, sign and legally notarize agreements on at least 20 different documents.
    The process is same whenever I deal with government approvals or documentation.
  • Website maintenance is a pain: Then there is site maintenance. From time to time, I have to take backups, upgrade software on all my sites, setup caching, content delivery networks, speed up my pages, optimize my content for search engines, give warnings to sites duplicating my content, deal with advertisers & sponsors, update affiliate links, create and edit PHP/HTML/Javascript code, test in a dozen different browsers, monitor site downtime, email deliverability, site bandwidth, data base connectivity and a slew of things that I do not even remember. And there is no particular timeframe for these activities, some of them can happen even when I am sleeping and I need to attend or else… [related: how I maintain my website cheaply]

You get the drift. In simple words, running a business is not just about what you are passionate about, but also 1000 little things that can annoy you or reduce your attention.

Thankfully there is a workaround:

Just like everything else in life, in business too, you should optimize the portions that you enjoy most and minimize or avoid the ones you hate.

Remove things that are not necessary for your business

This is the most effective but very difficult part. Whenever you hate a particular aspect of your business, ask yourself if that task is really required to run your business.

For eg. I used to have search filters on Twitter for certain keywords (like excel formula) and then I would monitor these results once or twice a day and see if there is a question that someone is asking that I can answer or replying. While this worked quite well to acquire new members to my site, I figured that this is not really necessary. So I just stopped doing it. There are many other examples like this.

Automate

Your next best option should be automate all the activities that you do not enjoy doing. Once you automate by installing some software or setting up a process, you will have more free time to focus on things that you enjoy.

Outsource poop work

This is the simplest way to get rid of poop. Just outsource it to someone who is efficient at this. The only downside: it will cost you money. [related: my experience outsourcing work using oDesk]

Batch together poop work

There are some things that you can neither automate nor outsource. The best way to tackle them is to batch them. Just let the poop accumulate and do the cleanup work once a day or week. For eg. I must manually withdraw money from my payment processor to bank account. Instead of doing this every day I just let the money accumulate and when the balance reaches $3000 (usually once a week), I give the withdrawal instructions by logging in to their site.

Appreciate poop

This is important. Many of you might get in to business under the illusion that passion can help you coast thru all the boring tasks. That is never the case. No matter how much we love our kids, there is a point when you start hating the nappy changing routine. Instead, learn to appreciate all the little things that go in your business. Try to make them fun and always look for opportunities to remove or automate tasks.

What is your experience with following passion

I think passion is very much over-rated. While passion is a must have ingredient to run a fulfilling business, you also need to have doses of reality. Any meaningful business must deal with lots of little things and not all of them will be enjoyable.

I want to know what your experience has been in running a small business. How much do you agree with the views presented by Amy or myself?

Please share your views using comments.

How I am saving 180 minutes per day + Free Download

Many startup owners suffer from one disease called as pretending to work. I am no exception. When I started out, life was very very smooth. I suddenly found lots of free time, which I was using to play with my kids & wife, go on drives, read books and workout.

But with in a span of 6 months (by September 2010), my company was growing beyond my imagination. I was flooded with emails, phone calls and opportunities for work. Since I am very bad at saying no, I kept on replying to emails, answering phone calls, saying yes to work requests.

While all this seemed good (as sales & profits were increasing), the truth is more startling.

I was wasting more time on trivial, less bang-for-buck (we call this BfB hence) work!!!

How could that be possible?!?

Well, it seems that is quite natural for entrepreneurs. We as a breed have lots of passion. So much that often, we mistake non-work for work and spend hours on it.

How did I realize that I am wasting time?

As you can guess, the whole realization came from reading a book. I bought Tim Ferris’ Four hour workweek book recently. As I started reading it, the concept of 80/20 principle made more sense. So I thought, let me give it a shot. I listed all the activities and how much time I spend on them on a paper. And I was astounded looking at the stupid mistakes I am making.

Here is what I came up with.

As you can see, I spend 3 hours a day on email, another 45 minutes on trivial activities like social networking and checking stats. I had an inclination that I waste a lot of time on Gmail. Heck, I even wrote a post telling people how to use gmail effectively.

But after listing all these activities and adding a BfB rating to each, I knew that most of my time is spent on least BfB activities.

How am I planning to spend time?

I am planning to not visit my Gmail inbox more than thrice a day – 30 mins in the morning, 20 in the evening and 10 more before going to sleep.

I am also hoping to cut short my time on social networks and stats pages by 30 mins a day.

This is how my proposed time allocation looks

As you can see, I could reduce 180 minutes of time from everyday activities (*ed ones) and add 15 more minutes to occasional activities like financial planning.

I am hoping to stick to this schedule and see how it works out. I will report back in a month about the findings.

Some practical tactics to save time

  • Delegate: Many of us think we should do everything ourselves. It is so wrong. Instead practice delegation and you will realize that you have more time for important stuff. I am learning this myself (read my experiences of outsourcing work)
  • Use technology: Use tools like rescuetime and leechblock to monitor how your time is spent and reduce chances for waste.
  • Take a break: Recently I was away from my home office for 9 days to do some workshops in Maldives (more on this later). Initially I worried how the business would run in my absence. But surprisingly, it made no difference. I did not post anything on my blogs, replied to only a handful of emails, did not answer phone calls (my phone was inactive), did not do any customer support work and still everything kept going. So you can see that many times, we just pretend to work. To test this, just take a break from everything for a week and you will agree.
  • Introspect & Write down: knowing thyself is not only a remedy for inner peace, it also works for business. You can spend 30 minutes listing down all the things you do from waking up till you sleep. Then assign priorities to each of them. You will be surprised at what you discover.

Free Excel Template to Understand your Time

Naturally, I made a simple excel template to understand where my time goes and how I plan to spend it. Feel free to download it and modify as you see fit.

Click here to download excel template for understanding your time.

Tell me how you waste time

I used to think “we should spend time, save money – as if you do not do anything in an hour it is lost, where as if you do not spend a dollar, you still have it”. While my philosophy on money did not change, I now view time in a different perspective. Earlier I had lots of free time and very little to do. But now the situation is reverse and it is important to not waste time.

Tell me how you waste time and what you are doing to change the situation? Share your views on the ideas presented here.

7 Things Startups can do that Big Businesses Struggle to get right

One of the big fears when you want to start a company is that, “What if Google / Microsoft / < your favorite big company > implements same idea, but better?”

Well, the sad news is that there is nothing that you can do about company X implementing your idea better.

But there is good news. You, as a start-up can do things differently that a big business will really struggle to do.

Growing a Small Business & Differentiating from Big Businesses

[original image from Robert S Donovan]

In my experience these things are,

1. You can Email immediately:

Here is what I do. I get about 30-50 emails out of which at least 10 are from people who are either customers or members of my community. I generally star such mails (in gmail, press s while reading the mail to star it). Once every 1-2 days I view all the starred mails and reply to them with information they asked, thank for the mail, provide solution to their problems. And if the email is simple question or thank you note, I usually reply on same day, sometimes in the same minute.

While my system is not fool proof, and often I forget to email back, I try to send replies to almost everyone emailing me.

You too can do the same, and create a stunning impression to your customers.

2. List your personal phone number on your website:

Here is one thing most of us hate in big businesses. If you have trouble using their product, you have to call a helpline (typical 1800-CALL-NOW) and wait impatiently for someone as clueless as you to pick up the phone and express the problem only to get a half-witted response.

Well, as a small business owner, you are at advantage. You can just list your own personal number on your site, product brochures or sales receipts so that customers can call you and get a quick fix instead of waiting in agony. And best of all, if my experience is anything to go by you hardly get any calls.

3. Choose whom you want to sell to:

Big businesses have no control over who their customers are. Any one can buy Windows, AdWords or iPod and bitch about them openly and publicly or create a huge support PITA. As a small business owner, you are at an advantage here.

I have personally refused clients that I think are difficult to work with or refunded full money to customers who bought my products but not satisfied with what they got.

4. Service instead of sell:

Traditional model of business is that you should focus on selling and give only a reasonable amount of service. The logic behind this is simple. Sales is what gets you money, service costs you.

But this logic fails when you are running a small business. I try to keep my sales efforts as minimum as possible and instead focus on service. This includes,

  • Making minor changes to my products for customers for free of cost
  • Giving free upgrades to everyone who bought the product
  • Allowing customers / prospects to ask questions directly by commenting on relevant posts (and then replying to them)

5. Collaborate instead of Compete:

We all knew that Apple has a killer phone, Microsoft has a killer Office application set, Google has a killer search engine. But instead of collaborating, they choose to compete, and now we have,

  • A killer phone and almost mediocre office app from Apple
  • A killer office app, ok search and mediocre phones from MS
  • A killer search, ok phone OS and mediocre online office apps from Google

See, it is in the blood of big businesses to compete. But small businesses can be very different. They can collaborate.

For eg. many of my customers, students and web-site visitors asked me to do an online course on financial modeling. Now, I am not an expert in that area, but I can kick ass in Excel. So I collaborate with another small company, called Pristine and we are doing a course on Financial Modeling using Excel. It is a win-win for everyone.

6. Keeping things really simple

Decision making is a pain in many big businesses. Front line employees are often not empowered to do anything more than what their job description says. This is not so in a small biz. You can choose to keep almost eevery aspect of your business really simple. For eg. I choose to keep refunds dead simple. Anyone not liking my products have to just ask and they will get a refund. Some ideas for you,

  • Allow customers to get in touch with you thru email or phone. Dont list generic email ids like sales@companyname.com instead give id like chandoo.d @ gmail.com so customers know that there is a real human being at the other end.
  • Keep sales process really simple: Deliver goods almost immediately or at least do it in the promised time lines. Don’t try to oversell or hard sell.
  • Do surveys when working on new products: do a simple survey like “are you interested in buying x?” and use the feedback to decide whether or not to work on a product.
  • Accept mistakes and move on: when you mess up, just say so and then move on. Life is too busy to worry over split milk.

[related: simplicity and other values for a startup]

7. Doing the right thing instead of doing the profitable thing

A big business must always have profit as its goal, even when they say “don’t be evil”. But as a small biz owner, you can do what is right, even if it costs you more. Most of the time, the extra cost is always extra time you work on x. So it doesn’t effect cash-flow as such.

For eg.

  • I could improve my revenues by 25% just by placing one more ad on my website’s article pages. But I dont do that because it would hamper my visitor’s reading experience.
  • Few of my students couldn’t finish my online course in time and asked me if they can stay back few more weeks to finish the course. I gave them an option to join 2nd batch at 75% discount. That is right 75%!!! and many of them joined batch 2. Now, I could very well have asked to pay them full fee or 50%, but I choose to cover only half of my costs because that is right thing to do.

What do you do to distinguish your small business from others?

Related info: That is a not a competitive advantage and Real unfair advantages both from excellent A Smart Bear blog.

Monitoring a Startup Business – What Metrics to use?

An important part of running a company is frequently measuring your business at macro / high-level. But doing this in a start-up can be a overhead because you are constantly running and don’t have much time to sit back and see if everything is going as per your plan. But nevertheless you should do it, at least once a month or quarter.

Here is a list of metrics that I use on regular basis to monitor my business progress:

Financial:

  • Cash generated in the last month: Remember cash ≠revenues.
  • Revenues last month and their breakup by area (I get money thru product sales, training, consulting, advertising and affiliate sales)
  • Expenses last month
  • Overall sales trend and whether it is as usual or something interesting is happening

Marketing:

  • New customers last month
  • Sign-ups to various news letters, RSS etc. on my site
  • Overall unique visitors last month
  • Customer engagement: No. of comments, tweets, link-backs on my site etc.

Operations:

  • No. of customer queries, support requests
  • Number of questions students raised
  • What I feel about how productive I have been

How do I measure these things:

I use reports generated from PayPal, E-Junkie, Google Analytics, WordPress, Aweber to keep track of most numbers. For things like customer queries, I rely on gmail search.

What metrics you use to measure your business progress?

What do you measure and how do you measure them? Please share using comments.

Why I run my company from our Bedroom?

When I wanted to start I faced a difficult choice – should I rent a office or work from our home?

I am not a pro and con guy, I do not list down pluses and minuses of choices on a notepad before choosing one. I am more of a “discuss and develop opinions guy”. So I talked with my wife and few people I know.

It became clear that working from home is a winner for the time being. Let me rationalize my choice,

No rent

Working from home means I have to pay no additional rent. We just cleaned up a corner in the master bedroom and put the computer table, surge protector and a chair there and bingo, my workspace is ready.

More time with family

Since we have babies at home (our twins are just 10 months old now), it became important that I give more time to family. So naturally working from home made it easy. I can just turn off the monitor whenever kids need me.

No lonely feelings

Since my company is a one man company, if I worked in an office, I would have felt lonely at times. While I am not a great social person, I would love to have people around me so that I can share what I am thinking and get immediate feedback. So, working from home seemed good choice until I hire people.

No time wasted

My work involves consulting, writing, thinking, reading, connecting, marketing, launching and sharing. Now, most of this happens on sporadic basis – ie I get a lot of work on one day and no work on another. The creative parts of my work require that I am in a good mood to pull them off. If I feel down or lazy, I just postpone what I am doing as giving my best to what I do is very important. This is where working in an office would have failed me. Because I work in chunks, I would end up with loads of free time in between tasks.When working from home, I could just turn off my comp when I have no work and play with kids or help my wife or run some chores.

So, is working from home all rainbows and butterflies?

Of course, working from home is not all hunky dory. I do find some problems in working from home.

It is difficult to focus for longer durations:

Sometimes, when a client is in emergency or when I need to develop an idea further, I need hours of time. I am finding difficult to get more than 2-3 hours at a time, thanks to kids who need our attention constantly. But thankfully, I found a simple solution for this. I wake up early (4am or so) and work 3-4 hours at a stretch.

Laziness:

Sometimes I become too lazy, thanks to temptations at home. Mostly I find myself indulging in naps, playing, reading magazines or watching tv. Most of these could be avoided had I worked in an office.

But overall, I am happy that I am working from our bedroom.

What about you?

Where do you work from? What kind of good things you find in that work environment? Please share using comments.

Is it Scary to Start up? [and how I beat it?]

When I wanted to start my own company, there were several things that worried me,

  • Will I be able to get enough customers to get going?
  • What are the legal, tax implications?
  • What if I become lazy and dumb due to all the free time I get?
  • What will my immediate social circle think of this move? Will they understand and accept it?
  • Who would I turn to for advice, mentoring and support in the times of trouble?
  • Will I be able to generate at least Rs. 20k a month to support my family?

These are what I call “Scary Thoughts”. Scary because we dont the answers.

While I do not say that startups are not scary, I find that start ups are natural to human beings.

This is how I think you can beat the scary thoughts and start your own venture:

  • Talk to your spouse: This is the most important. Talk to your spouse about your worries and fears. We often feel that expressing our fears will make us vulnerable in relationships. But this is not true. You will be surprised to notice the amount of support and confidence boost your spouse can give you.
    Of course if you are single then you probably dont have many scary thoughts.
  • Test the markets before starting: You do not need to have a company to test whether customers will buy your product. I launched my first online product in Feb 2009. It was a simple e-book explaining excel formulas and I sold it for $5. It didnt go that well, but it taught me various lessons on how to launch products online. Plus it showed me that I have a real market and if I do things right, customers will buy from me.
  • Live Frugal: Most scary thoughts boil down to financial concerns like “will I be able to feed my family for 6 months while I work in basement on the next big idea?”. You can convincingly address this by living frugal. Spend as little as possible and never spend more than what you make. Establish frugal lifestyle way before you make the leap, that way you dont see the transition when you start up. We were spending only 20% of our income every month on running home (so we knew that if we save one month’s salary we can live 5 months without money and that is a huge confidence boost for me.)
  • Develop Surplus Cash: Whenever possible save madly. Dont hesitate to pick up the extra work or take up a small consulting engagement on part time basis. Add all these funds to your bank account and make it plum. At one point we were sitting on funds that could last us 60 months without salary.
  • Dont take mortgage or any other long-term loans: Simple, if you have a loan, then you need regular income to pay it off. So dont go for any. Instead just buy what you want with cash. If you cannot buy something, just rent it. I made a mistake and bought a house in 2007. But the loan tenure was only 7 years. I took some of the surplus generated in 2008/2009 to pay off the loan (I still have 18 months left on it, but I am not really worried now.)
  • Make new friendships: Find people who have started companies and develop friendships with them. Listen to them intently and treat them as your mentors. I am lucky to find such mentor in 2009. He has started a company and worked on his own for almost 20 years. I have shared my worries with him and he understood and told me how he handled the same.
  • Talk to an auditor: In India there are lots of myths on “how to start a company?”. But for most part it is ridiculously simple. Talk to an auditor and ask clearly how you will be taxed, what happens to the money you get from foreign clients etc. The new tax laws in financial bill 2010 allow you to keep more of your money in the pockets.
  • Accept the fear: It is natural to be frightened by unknown. Even if you are employed, you could be fired because someone was ignorant about their loans (housing bubble) or exuberant about their business (IT bubble). You could be making less money and working more because your company decides suddenly freeze salaries and increase working hours (happened in India for lots of IT companies). Just accept the fact that life is uncertain. Instead of fearing it, just embrace it.

What are the scary thoughts holding you down?

These are just a few pointers from my experience. What about you? What thoughts are holding you down from achieving even more?

Please share using comments.