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Top 10 Considerations to Focus Your Startup

These ten points will help you focus your team, company model, and financial situation.

If the goal of your startup is to succeed, this is probably the most important article on entrepreneurship that I have yet written, The following ten points will help you focus your team, company model, and financial situation, taking much of the guess-work out of execution and giving your startup maximum focus.

1) Are You Selling to Companies or End-Users?

[login] This is one of the biggest pitfalls there is and can completely dis-focus the efforts of a company. Selling to companies appears very lucrative and attractive because one enterprise software sale can provide salary for all the co-founders. Yet as lucrative as it might seem, selling to companies is enormously difficult. Be prepared for deadly-long sales cycles. Selling to enterprise also requires connections in order to get attention and in the door of some of these places. Plus you need a more mature product than you would if you were selling to consumers, requiring more resources, possible investment capital and a longer time horizon for your company -- all adding extra risk.

Selling to consumers is also tough. Unlike the enterprise world where only one customer is needed, when selling to a consumer mass market, it is imperative to regularly and cheaply reach a wide and consistent audience who is finicky and have attention span of 3-year olds which you must figure out how to capture. If you do not, you will not stay afloat.

There is no right answer as both roads are tough. Make sure you pick just one and stick to your guns because perusing both, the business customers and enterprise customers is a sure death trap.

2) Investment or No Investment?

There is already an article devoted purely to why you should not pursue investment, but investment capital can be great for some companies. It can give your company great connections (the investors themselves) and capital with which to buy resources and man-work-hours. The negative side of getting capital is that a tiny percentage of people get it; usually those who have built successful companies before. Plus it takes quite a bit of time to prepare investor presentation materials (investors will get annoyed if it is not up to snuff) schedule meetings, meet, travel to meet, etc. This all costs you time and money, which you would be getting with their capital, so it's a bit of a Catch-22.

If you have not been a successful entrepreneur in the past, you may gain quite a bit of focus if you do not try to secure investment, but instead allow yourself a longer amount of time before you need to reach out to investors. Also, you can try to realign your company model to be simpler, so that the founding team will need less investment or none at all. The road to investment capital is long and windy if you have not done it before, so if you can avoid it, do.

3) Partners or No Partners?

It has been traditionally considered that all start-ups need a founding team. With the rapid decrease of development and hardware costs, this is less true now than even 5 or 3 years ago. Code snippets can be taken from examples online, so can html templates, and man other things.

Founding partners can be great, but finding great ones is much more difficult than finding flakes, dishonest or crazy people. Plus, if a founding partner leaves, it can really cripple a young company. And at the end of the day, finding partners takes time and effort -- why not just spend it learning that skill you think you don't have and the reason you are looking for a partner in the first place?

4) If Partners, What Kind of Partners?

If you opt for finding a founding team, try to find people with these qualities:
    * Honest and integrity
    * Professionalism
    * Hard-workers
    * Should have experience starting projects and companies
    * If possible, great people you have worked with in the past
Here are some signs that should make you run from your potential founders:
    * Arguing and disagreements early on
    * Dishonesty
    * Truly crazy smart people (you need sane smart people)
    * Lack of Professionalism
    * Flakiness
    * If they are looking for work at the same time
    * If their time horizons are less than 6 months
    * If they do not show too much interest (don't chase people for a particular skill)
    * People who tend or show tendency to lead you on -- this is a silent killer as it is a tremendous time-waster

5) Financial Focus and Risk Tolerance

Financial uncertainty can really dis-focus a company. If you need income, you will be more likely to chase investors or go after bad or inappropriate monetization models. Before you embark on a project, try to have a clear idea of how long you can stick with it, and how much money you can lose. In general, just as stock market investing, it can be healthy and sane to have some stop-loss conditions which dictate the amount of dollars and/or months you will be able to spend on the project.

Know how much you can risk, but do not lose sigh of the tipping point where risk becomes recklessness and hop clouds up reality. As a very general rule of thumb, the younger you are the more you can risk, and as you get older, your risk tolerance should become smaller as you probably have to support people around you, and save for your own retirement. Ideas and startups can be very luring, but you must be realistic about risk, and consider whether it is right for you.

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