You have a great idea. You are prepared to work to death. Maybe you have even assembled talented team. But no matter what you do, you can’t seem to get any funding or traction for your startup. What are you doing wrong? Is this a sign your startup is doomed?
Take a Step Back. Before you go into full-scale panic and do something really foolish – like revisiting the idea of spending your life in a cubicle — take a step back. Go for a latte at a nearby coffeeshop and bring a notepad. You need to take inventory of what you’re doing right, what you’re doing wrong, and why the dots aren’t connecting. Before you begin, prepare to be honest – painfully, brutally honest with yourself and your startup.
Evaluate Your Startup. The starting point for diagnosing your startup troubles are in examining the concept from the ground up.
- Uniqueness or Improvement? Is your idea or project unique and interesting? Does it improve on an existing product or service that you might be able to provide better, or more cost-effectively to consumers? Would it fill a need in the marketplace that does not currently exist? Coming up with the idea for start up can sometimes result in roadblocks, but the best place to start usually tends to involve focusing on your unique talents, gifts, hobbies, and passions, or a hole in the marketplace that is unfilled and has a ready consumer base. There opportunities everywhere, is often just a matter of identifying them. Not every opportunity is one that is promising or will be promising in the future. For example, starting a local ridesharing service is going to be very difficult given the existence of Uber or Lyft. Starting up a new cola beverage company is going to be just about impossible. Take a look at the marketplace that your product is in, and look around. Are there barriers to your entry into the marketplace? Are you opening your startup in a field that is already crowded or saturated? If yes, your startup will probably not make it.
- Is it sustainable? Will you have a business model that is sustainable in the long term? Is it the kind of business that can grow, and grow substantially through the investments of money, resources, or time? It is possible that your concept is better suited toward an individual service (such as a dog grooming service) rather than a scalable business that can grow endlessly (like the sale of products). Furthermore, is it the type of business for which there are many consumers with significant appetites? Put in other words, are there millions of buyers for your product? Could there be? If your startup focuses on a niche audience or consists mostly of services, it could be tough to grow exponentially.
- How will you distinguish your product/service? There are thousands of businesses in California and nationwide – how will you distinguish yours? Businesses distinguish themselves in many ways, some by offering something completely new, others by location, specialty, or price-point. Whatever you decide, you will need to find some way of differentiating your business from the hundreds of thousands of others like it. Providing something unique is again, critical to the long-term success of a business. A pizza shop that opens in the same neighborhood of 3 other very highly regarded pizza shops, but is not as good, will probably not survive.
- Do you have enough money to break through? Generally, a new startup needs enough money to launch the prototype, platform, or initial service, so that it can open business operations and begin taking sales or orders. Because starting up is so time-consuming, it can often take a tremendous commitment of time (meaning, you are either working before-work, after-work, on the weekends, etc.), short of quitting your job to be able to devote enough time to getting the startup off the ground. Either way, you will need to look at yourself straight in the mirror and ask whether you have enough money to survive 6 – 12 months, and pay bills, rent, mortagage, etc., and feed yourself while you try to launch your startup. Bootstrapping is what you make of it – it can be a blessing just as often as it is seen as a curse, as you will learn to work leanly until your startup gets its swimming legs.
Evaluate Yourself. Are you starting up because you crave wealth or freedom? If you are starting up on the hope that your startup will attract millions of dollars and allow you to stop working and have a cushy retirement, starting up may not be for you. Startups often involve years and years of grueling work before they reach a point where they are profitable. Some startups do millions of dollars a year but are not profitable – they break even. Success in startups depends largely on the personality of the person at the center. Are you the type of person that would be happy running your own business? Does the idea of being solely responsible for your own failure or success thrill you, or frighten you? If you are motivated by a fear of failure, then congratulations on sharing a common trait that many if not all founders have.
Don’t Fear Failure. Many startup founders worry excessively that if they fail, they will feel shame, embarrassment, humiliation, and will be forced to admit they were a failure to their friends, significant others, family, and colleagues. This is the kind of thinking that will hold you back. Think of the example of a karaoke performer who starts singing, but does not commit to belting out the tough notes in the song due to fear of embarrassment, and then just ends up slinking away. You must commit and give your startup everything you have – your fear is the only thing that will hold you back.
Starting a business isn’t an easy decision to make, but it can lead to incredibly rewarding results, and the life that you may have always dreamed of. If you are thinking about going out on your own, and aren’t sure where or how to start, drop us a line.
AXIS Legal Counsel has helped advise numerous entrepreneurs, founders, and business owners about starting their own businesess and dealing with legal issues that arise after the business has been formed. AXIS can assist with startup formations, contracts, deals, and transactions, business administration, corporate governance, operations, risk management / insurance, labor/employment matters, intellectual property, healthcare, crisis management, directors/officers,private/data security, technology, statutory/legal compliance, and business litigation. AXIS represents California and Delaware startups, Corporations, LLPs, LLCs, Partnerships, Small Business, Startups, and other business matters involving corporate law.
For information on retaining AXIS Legal Counsel to represent your startup or business in connection with any legal matter, contact email@example.com or call (213) 403-0130 for a confidential consultation. Axis’ managing attorney Rabeh M. A. Soofi is ranked as one of the “Top Women Lawyers of Southern California” by SuperLawyers Rising Stars, and represents businesses and start-ups throughout Los Angeles and California.