Are you really passionate about the problem you want to solve and believe starting a business is the best way to realize that?
Some people think that starting a business is a cool thing to do, whereas some others see this as a way to go big and get rich. If you are considering starting a business solely because of the perception and money, think twice. 90% of new products fail – meaning most times you might be better off if you just work for a company. In an article I read about the common traits of successful entrepreneur, the first one is to “Do what you enjoy”. Engaging in such a high uncertainty environment would in times have you question the purpose of all these ‘sufferings’. Only if you truly enjoy solving the problem you tasked yourself with and believe that no one else is going to fix this if not yourself, you will be able to survive through the emotionally draining times.
What is your risk to start the business? Are they risks that could be deal breaker of your business?
We learn from Kevin Rumsfeld at HealthCraft that he pulled out because of family obligation. We also know that Jessica Matthews couldn’t pass on the opportunity to study at HBS. All these risks and opportunity costs lead to a strong implication on your business, be it complicating the operations or worst case, dissolving your business. Of course you could not predict the risks that have not yet come to you, but it would be an oversight if you do not do an honest self-assessment to evaluate what risks you are taking on. Is that the business school loan that you have to pay off? Is that you are ready to start a family soon? Is there a way that I can mitigate some of these risks, or is it better to not start the business or start later?
Do you have the right setup of the founding team to support your startup?
In most cases, we need someone to complement your skillset in the business and that is why selecting the right co-founder is so important. Often times, we tend to focus on the skill set (“the resume”) of a potential candidate without considering other soft factors such as trust and value alignment. In Savage Beast, Jon knew Will through a common friend that he believes would be a brilliant engineer for the company just by looking at Will’s track record. Yet, without the experience on working together, the foundation of trust is weak to begin with and deteriorates further as conflict arose. In ProLab, Hillary and Trey didn’t have the trust issue – they knew each other well and they seemed to have complimentary skill set. Unfortunately, it was the value difference – that Hillary focused on growing the business whereas Trey wanted to expand his power and influence – results in the breakup. Therefore, I see that (i) skill set, (ii) trust and (iii) value alignment are equally important as we are considering a co-founder for the business.
If you have passed the three question tests, congratulations! It doesn’t mean that your startup would definitely fly. However, it does help you to avoid going into landmines that you would have bigger regret later.