Jason Fried, from 37signals, wrote a great post last week on Signal vs. Noise, titled Start a business, not a startup, in which he talks about the importance of handling a startup as the business it is supposed to be, and the obvious rule that any business needs to generate revenue to live on and grow.
From the moment they go live, startups are as real as any other business. They are governed by the same set of market forces and economic precepts that wrap around every other company, new or old.
At the atomic level, all businesses need to generate revenue to pay their bills, grow their business, and stay in business. The sooner they find themselves in the black, the better chance they’ll have to survive.
[…]
A poorly run startup is a poorly run business. A wonderfully run startup is a wonderfully run business. I don’t believe there are many great startups that are bad businesses. Maybe less than 1%. If the business is bad the startup is bad. A great idea, maybe, but a great business, no.
So if you start something up, start a business, don’t start a startup.
— Jason Fried; Start a business, not a startup
I think this is very important in an age where the speed and ease of getting things off the ground makes many people overlook or delay the very crucial business planning part of building their startup; while some others have a business goal as simple as being acquired by X or Y of the giant companies.
Some of what’s going on nowadays reminds me a bit of the first internet bubble, when everyone launched startups covering every imaginable idea with no business model whatsoever, aiming to cash out with an IPO. Now it’s no longer IPOs they’re after but acquisitions by bigger players. That will come to an end too, as those big players start considering how they are going to fit those startups into their bigger picture and make more money out of them.
Another thing to consider is that even if you’re after someone acquiring your startup, you’ll certainly have better chances of getting a better deal if your startup actually generates money and will bring an extra financial value to them.
A really interesting eBook I came across recently, and that is very useful for any entrepreneur, is the CenterNetworks Startup Tips Month eBook, that was published by CenterNetworks of course, and that holds hundreds of tips by a diverse set of entrepreneurs, all in one easy-to-print 40+ page pdf.
The eBook contains insightful tips from the likes of Andy Sernovitz, Alex Bard (goowy), David Weekly (PBwiki), Angie Chang (Women 2.0), Ben Elowitz (Wetpaint), Rachel Cook (Minti), Richard Anson (Reevoo), Jan-Joost Rueb (eBuddy), Craig Walker (GrandCentral), Benjamin Gott (Indistr) and many more.
You can download the eBook from CenterNetworks; here are just a few of the tips as an incentive to download and delve deeper into it, it’s really worth it:
“Make sure you think through why you are starting a company, what are your personal / professional goals and where you want your company to be in 5 years. It will help you make the right decisions along the way.”— Alex Bard from goowy
“Business model should NOT be ‘get acquired by Yahoo or Google’ – generate real dollars and cents as early in the startup life as you can.”— Angie Chang from Women 2.0
“Be clear on your market and how you intend to make money in it.”— Rachel Cook from Minti
“Get as much feedback from people as possible – ideas are cheap, its the execution thats tough, so dont be too concerned about others stealing your idea.”— Richard Anson from Reevoo
Loic Le Meur, for those who don’t already know him, is an accomplished French serial entrepreneur, most famous for the work he did with weblog hosting company uBlog which was later merged with Six Apart; he organizes the annual Le Web conference in France, and has now moved to Silicon Valley where he founded Seesmic.
A recent article in the Financial Times profiles him and publishes his set of ten rules for startup success, that come from his hands on experience and are very straight to the point and useful. The rules are reprinted below:
# Source: Financial Times
Many books have been published, walking new entrepreneurs through their first steps of setting up and running their business, but not all of them come from someone like Guy Kawasaki, former chief evangelist at Apple Computer, current Venture Capitalist and successful entrepreneur who has been involved with several startups over the years.
In his book “The Art Of The Start“, as its name suggests, Guy talks about the art of starting a business and how each and every task at hand should be handled; from identifying your customer base and writing a business plan to raising capital and bootstrapping to recruiting, establishing partnerships and building brand identity.
‘The Art of the Start’ shares all the essential steps to launch great products, services, and companies, as well as the ways you can unleash the entrepreneurial thinking and creativity that can keep you ahead of the pack.
Kawasaki provides readers with GIST, Great Ideas for Starting Things, that include his field-tested insider techniques for bootstrapping, branding, networking, recruiting, pitching, rainmaking, and buzz building.
The book is a very handy resource for anyone starting a business, giving them a checklist of points they have to focus on and consider to get their startup off the ground, up and running.
At different points, it does feel like the book is targeting technology startups seeking venture capital a bit more than others, but for entrepreneurs in the Arab world who don’t have as much access to venture capital for the time being, the focus should be more on the lessons and less on the specific details in these parts of the book.
#Amazon : The Art Of The Start (Guy Kawasaki)
Evan Williams, the founder of Blogger, Odeo and Twitter, wrote some time ago about trying to find a more structured way to evaluate product ideas and determine whether they will be successful or not.
It’s a very interesting post, that is really worth reading. Here I’ll be listing the main points, and the main questions you have to ask yourself when evaluating your product, and will leave you to read the details on his blog.
The main points and questions you have to consider in your product / service evaluation are:
Tractability: How difficult will it be to launch a worthwhile version 1.0?
Obviousness: Is it clear why people should use it?
Deepness: How much value can you ultimately deliver?
Wideness: How many people may ultimately use it?
Discoverability: How will people learn about your product?
Monetizability: How hard will it be to extract the money?
Personally Compelling: Do you really want it to exist in the world?
Read the full post in detail here: Will it fly? How to Evaluate a New Product Idea
As a small business that’s still making its first steps in the world, every startup needs as much advice and assistance as possible on how to move forward, what to expect, how to grow the business and what problems to avoid.
Steve Gottry’s book “Common Sense Business : Starting, Operating, and Growing Your Small Business–In Any Economy” is one of those books that does just what its title says, guiding any budding entrepreneur through the different stages of his startup’s life.
The book is a pretty light and very interesting read; in it the author pulls from his business experience and the ups and downs he’s been through to share the knowledge he accumulated and the different lessons he learned with the reader.
Gottry guides the reader through the six stages of the small-business “life cycle,” from dreaming and planning through the practical stages of implementation and growth. He advises on how to capitalize on your own personal strengths in relation to employees, customers, and vendors. He also shows how to structure your day, remain sane, and keep your business alive without drowning in it and becoming a workaholic.
In clear, direct writing style with quite an inspirational tone, Gottry’s advice is well organized and sincere; From implementation to growth, to preservation and evolution, to downsizing, he includes specific how-to’s, which explain the different aspects of running a business day in, day out.
It’s a really good read and practical guide based on real personal experience, which makes it very useful for any person planning to launch a business or already running one.
It would’ve been an even better book, in my opinion, if it got into a bit more detail on the initial phases of business concept creation and the launch details, but it still is worth the read.
# Amazon: Common Sense Business (Steve Gottry).
One of the first important things to consider when launching a startup is its name, after all it is the name you’ll be using for all your professional activities, and as an umbrella for your company’s services and products, so it just has to be right.
Here are a number of tips for choosing the right name for yours:
Keep It Short: Sometimes you can get carried away, wanting to choose a name that expresses what your company does so clearly, that you end up with a sentence that feels more like a slogan than a company name. The idea here is to try and keep it as short as possible, so that it’s easier for people to remember, and even faster for them to type into their browsers.
Be Generic or Be Creative: Either go for a generic name that accurately describes what you’re about, or try to be creative and come up with a cool, yet effective and unique name. It’s a bit easier for Arab startups to come up with generic or creative names because many Arabic words are still available as domain names.
Keep it simple: Company names should not be difficult to pronounce or spell, it has to be easy for people to pass on to their friends and acquaintances, thereby aiding you with word-of-mouth marketing. There also shouldn’t be any confusion as to how its spelled when typed into a browser, which is something Arabic startups should pay extra attention to, as translating Arabic words into English letters can be very tricky.
Go for the .com: It’s a reflex a lot of people have developed, to just type in the company name .com; losing all that traffic just because you had to go for the .net or .org or whatever other extension is just a shame, especially when you’re at the startup phase and need every single potential user you can get. As many Arabic words are still available as .com domain names, this could be a relatively easy task.
Avoid Using Hyphens or Numbers: Again to avoid people misstyping your domain name and ending up on some other website other than yours, you should avoid using hyphens or numbers in your name. They rarely ever benefit a website. Many Arabic websites choose names with numbers in them, to stand in for Arabic letters, that should be avoided, not everybody knows what those numbers stand for and they sometimes stand in for different letters depending on where you are in the Arab world.
Keep it Meaningful: As hard as it is to come up with a generic name that says it all about your company, you should still try to come up with a quality name that combines a number of words, a mixture of descriptive with meaningful and generic.
Think Ahead: Yeah sure, you’re starting this as a little project from your bedroom or basement, but if you’re onto something interesting, that little project could turn into a successful company. Take that into consideration when choosing a name, sure you want to sound cool and all, but still professional enough for business and deals.
# Inspired by: Folksonomy
Sequoia Capital, one of the most important venture firms that funded startups like Apple, Google, Yahoo, Cisco Systems, Oracle, PayPal and YouTube, recently released a list of principles and key drivers of success for any startup aiming to make their business successful and build a sustainable, enduring company out of it.
Their list goes as follows:
Clarity of Purpose: Summarize the company’s business on the back of a business card.
Large Markets: Address existing markets poised for rapid growth or change. A market on the path to a $1B potential allows for error and time for real margins to develop.
Rich Customers: Target customers who will move fast and pay a premium for a unique offering.
Focus: Customers will only buy a simple product with a singular value proposition.
Pain Killers: Pick the one thing that is of burning importance to the customer then delight them with a compelling solution.
Think Differently: Constantly challenge conventional wisdom. Take the contrarian route. Create novel solutions. Outwit the competition.
Team DNA: A company’s DNA is set in the first 90 days. All team members are the smartest or most clever in their domain. “A” level founders attract an “A” level team.
Agility: Stealth and speed will usually help beat-out large companies.
Frugality: Focus spending on what’s critical. Spend only on the priorities and maximize profitability.
Inferno: Start with only a little money. It forces discipline and focus. A huge market with customers yearning for a product developed by great engineers requires very little firepower.