No matter what type of venture you’re building — B2B, B2C, physical product, digital product, a service, you-name-it — I firmly believe the most important skill to kick off your entrepreneurial journey is the same: resourcefulness.
Regardless of who you are and how many years of relevant professional experience you have, your first foray into entrepreneurship will represent uncharted waters. Even seasoned entrepreneurs face unfamiliar questions and sticky conundrums they don’t know how to solve. While delegation may seem like the catch-all solution to pay your problems away, it isn’t a substitute for an entrepreneur’s feet-on-the-ground, white-knuckling resourcefulness.
Being resourceful enough to find temporary solutions, interim alternatives, or workarounds that save the day is only going to elevate your entrepreneurial confidence and solidify your skills as a problem-solving CEO.
Ten years ago, I would have said something along the lines of creating products, profitably scaling, or finding ways to expand a business beyond the initial products or markets served. Today, my answer is a completely different one, but a total no-brainer: marketing and customer acquisition.
Coming into entrepreneurship from finance, I used to think marketing was fluff. I assumed ads always generated a positive return and great products always attract leads and sales. After my own share of entrepreneurial highs, lows, and consulting hundreds of other founders along their journeys, I’m certain it isn’t so.
Finding product-market fit, determining exactly where and how to reach your audience, and finding a profitable, scalable, innovative way to do so — and constantly evolving that strategy so it doesn’t grow stale — is undoubtedly the most difficult challenge of growing a successful startup. That said, taking on a challenge is probably what attracted most of us to this path in the first place…
Sometimes. Social media is far too broad and complex to cover in a subsection of one article, but the simple answer is that yes, for some products, it works. A few industries for which selling on social media has historically worked decently well:
- Pet products
- Eye-catching desserts
- Anything sensational, hilarious, or that’s gone viral
For most everything else? It can work better for lead generation than immediate sales. When considering working with a social media influencer or running ads on social platforms, you’ll need to determine:
- If your audience is even on the social platform(s)
- Whether you’re expecting leads or sales from the promotion
- Whether you plan to make your profit on the first purchase or through an ongoing funnel and value ladder, leading to higher profits on the back end
- How much time and money you’re willing to spend testing the platform
- The maximum acceptable cost per lead or customer acquisition cost
As audiences become blind to ads and influencer authenticity is waning among countless sponsored posts, breaking through the noise on social media can be increasingly difficult and costly. It’s probably worth a try, but you’ll want to keep a short leash on your spending and collect as much user data as possible to take off the platform and sell in a less noisy, crowded environment.
It depends on your definition of “get started”. If by “get started” you mean produce a boatload of inventory for an unproven idea and an audience you have yet to cultivate, you could easily spend tens or even hundreds of thousands — but I wouldn’t suggest it.
If, alternatively, “getting started” means throwing together a digital presence to collect leads or process pre-orders, build an audience, and test your concept, that can all be done for next to nothing. I’ve built a business on under $1000, and using just three days of lead generation ads, interest forms, a simple website and checkout page, referrals, and email marketing, generated a 200x ROI within a few months.
The basic components of getting started are simple:
- An opt-in page (free options abound)
- An email provider (these can range from free to a couple hundred dollars to start, but they’ll provide a powerful engine to nurture your interested leads into paying customers)
- A pre-order or checkout page or a crowdfunding campaign, depending on which route you take to defer the risk of product costs until after you’ve confirmed interest in your offer (these can range from free to a couple hundred dollars as well, but utilizing these options upfront will save you wasting thousands more on a product, app, or service nobody wants)
If you’re testing the concept of an app or tech product, there are plenty of free no-code app builders that allow you to create a functional minimum viable product beta users can weigh in on before telling Sequoia you need $10M to build the real thing.
Simply put, most entrepreneurs spend far too much on everything but audience-building and proof of concept. If you can’t prove your concept on a shoestring budget, what makes you think spending $10k will result in a profitable outcome?
CAC, or customer acquisition cost, is the amount of marketing dollars it takes you to turn a stranger into a customer (to generate a sale).
The maximum CAC acceptable for your startup varies not by the price of the product you sell, but rather by your customer LTV (lifetime value) and the profit margins on that LTV. I’ve written an entire piece breaking down the optimal CAC calculation and when to cut lingering leads loose, but I’ll include a simplified version below:
The maximum acceptable CAC should be less than the minimum profit you plan to retain from your customer LTV.
In other words, if your customer LTV is $100 (comprised of ten $10 purchases), and you have 50% profit margins (after product costs), then you’ll retain $50 in profit, before deducting marketing costs. If you decide you want to maintain at least $30 of after-marketing profit, then your customer LTV can’t exceed $20, since the $50 pre-marketing profit minus the $30 buffer you want to keep leaves you with $20 to spend on marketing.
That said, CAC costs are expected to decline as your company gains visibility, a warm audience, social proof, PR, and endorsements, so it may be worth sacrificing a bit of profit in the early days to generate a volume of sales that turns into referrals and reviews that increase your future conversion rates.
Maybe never. Many aspiring entrepreneurs seem to believe fundraising and hiring are the first two steps to building a business, when really, they should be identifying a solution to a problem and proving that concept. Hiring employees isn’t a compulsory check-the-boxes next step; it should be reserved for the time when your business growth necessitates expanding your team.
That said, deciding not to hire employees from day one doesn’t mean going it alone. If you feel you’re missing crucial strengths or skills required to bring your ideal venture to fruition — as many of us are — cultivating a group of partners or cofounders to round out your shortcomings is a great option.
You can use founder networking sites like Cofounderslab (formerly Founderdating), LinkedIn, AngelList, or other social platforms or forums that boast an audience of people with the skills, interests, and experience your startup is lacking and offer them a fair equity (ownership) split. Hiring full-time salaried employees, however, should only occur when it’s an imminent need for your business or you have the financial means to comfortably make such hires that will add clear and measurable value to your startup.
Maybe now, maybe never. Deciding when and if to pay yourself comes down to a few factors:
- Are you able to build and grow this business without paying yourself?
- Will paying yourself significantly limit your business growth at a crucial time for expansion?
- Are you the sole equity-holder in your business, or is it a partnership between you and one or two colleagues?
- Do you plan on taking on outside investors?
- Are you trying to build a lifestyle business or take your idea to the moon in the hopes of becoming the next billion-dollar unicorn?
If your goal is to grow your business as fast and big as possible, taking profit that could otherwise be used for revenue-generating activities out of the business to pad your own pockets isn’t the greatest idea. That said, you may need to eat, keep the lights on, and pay your rent, so taking a salary may be a necessity, especially if you don’t have any outside financial support.
I’m a proponent of keeping your salary as small as possible — if you take one at all — until or unless you need to and you’re generating a healthy profit. If you’re never planning to sell your business or welcome in outside investors, perhaps taking an extravagant salary won’t have any grave repercussions. If, however, you’re planning to fundraise, you may have a hard time explaining to investors why you hampered the growth of your early-stage venture by prioritizing your above-average salary over your business’s lead generating and customer acquiring paid marketing activities.
While funding your startup is a personal decision unique to each founder and their financial situation, I’m a proponent of having skin in the game. I’m also a proponent of spending cautiously, taking thoughtful, calculated financial risks. To me, that means investing a small portion of your nest egg — an amount you can afford to lose — and keeping your costs down.
I wouldn’t suggest borrowing money from friends, but family might be a viable option if and only if that family was already planning to gift you that money, with no expectation of return.
- If your parents were planning to pay for your MBA, you may ask that they instead put some of those funds towards your startup, for an “experiential MBA” that might result in an even more educational experience
- If your parents were planning to fund your future wedding (typically a negative ROI event), perhaps you might request that they instead invest a portion of those savings into your business
- If you have a relative who might be a great partner for your business, perhaps you may invite them to join you as an equity holder and investor. I know a young first-time founder who’s built a successful male-focused skincare line with her mother, who’s an experienced dermatologist.
Investing in your startup is an investment in yourself, your entrepreneurial education, and your career. The same people who could justify investing in your education or career may be the ones fit to financially contribute to your startup journey.
Building a business looks different for everyone — some people team up with friends, others hire remote outsourced freelancers, others build a local team, and some go it alone. Your company structure, the type of products or services you sell, and your own preferred working and social environment will determine whether you get lonely.
One of the loneliest months of my life was one of my company’s peak sales milestones. Despite making hundreds of passive sales online, amounting to hundreds of thousands of dollars, I was largely steering the ship all on my own, with no one to confide in or share the journey. On the flip side of that, I can easily get socially burnt out from just a few sales calls, hence why I’ve largely phased those out of my businesses altogether.
I’ve found that entrepreneurship and loneliness ebbs and flows, alternating between peaks and valleys. At the beginning, you might be excited for the heads-down journey of secretly building a venture behind closed doors. After a few months locked in your basement trying to make something out of nothing, loneliness is probably a normal side effect. Once you start expanding your team or taking on the inevitable “customer service” role — with hundreds or thousands of customers to serve and placate — you may decide that crawling back into your dark, solitary hole sounds like a welcome contrast.
In order to stave off loneliness, you’ll want to build a circle of peers, colleagues, friends, or family who are happy to discuss and support your startup’s ups and downs — especially the downs. That said, staving off loneliness is also incumbent on an entrepreneur to seek out the level of social interaction they need to thrive and feel fulfilled. For some, that means working out of a coworking space every day, and for others, weekend outings with friends are sufficient to offset the less social environment of running a business from their bedroom.
Deciding when to start your entrepreneurial journey is just as difficult as deciding when to end it, and unlike a job that ends in either retirement or a severance package, entrepreneurship leaves it up to you to decide.
There is no “right” way to make this call, but there are a few helpful considerations:
- Are you allotting a set amount of time to generate proof of concept?
- Are you the only person financially supporting your journey, or do you have a family member, significant other, or outside investor providing you capital extending your acceptable runway to break-even?
- Are you just interested in one specific business opportunity, or are you passionate about making a lifelong career of entrepreneurship?
If you’re just in it for the money and your venture doesn’t pan out financially, deciding to quit won’t be all that difficult. If, on the other hand, you’re dedicated to creating and growing impactful ventures as your lifelong career, you can remove “quit” from your vocabulary and replace it with “pivot”. Failed ventures and flopped launches are often the learning experiences that lead us to subsequent successes. Lifelong entrepreneurs realize that while tweaking their venture may be a necessary step, quitting just isn’t in their DNA.
In my somewhat biased opinion — as an entrepreneur myself — yes, I wholeheartedly believe the experience is worth the financial and career risk. However, I should add two caveats:
- It’s worth the financial risk so long as you make thoughtful, calculated decisions and keep most of your spending to value-enhancing, revenue-generating activities
- It’s worth the career risk so long as you take full advantage of the learning experience, make yourself the most useful and resourceful member of your team, and ensure you come away far more equipped, savvy, and educated than you were going in
Lastly, I should mention that entrepreneurship is only worth the risk for those passionate about pursuing this journey. If you’re simply in it for a “get rich quick” scheme or because you think it’ll lead to a great job down the road, then perhaps entrepreneurship isn’t the journey you should be pursuing.
100% yes. Building, launching, and growing a business is an impressive feat and one of the best learning experiences out there. The outcome of your entrepreneurial journey can’t just be measured in sales or a lucrative, high-profile liquidity event, like a billion-dollar IPO. The skills you’ll acquire throughout your business-building experience will undoubtedly enhance your marketability, and failing to give them real estate on your resume is doing yourself a giant disservice.
Here are a few resume-worthy factors you should take note of as you build your business:
- What skills did you employ going from idea to launch?
- What methods of marketing did you master?
- What type of a return did you generate?
- How many team members did you manage?
- What value did you provide for your customer audience?
- How did you leverage data to improve your marketing results?
- How did you improve your conversion rates over time?
- What obstacles did you overcome?
- What aspects of technology did you handle?
- What aspects of customer service did you deal with?
- What communication skills did you develop or perfect?
Answering each of the above questions may give you a bit of an ego boost and remind you just how valuable your entrepreneurial experience has been. If all goes south and you have to pack it in and get a job, know that you’re likely a lot more valuable today than you were the day you first started your venture, no matter the financial outcome you achieved.