For entrepreneurs to be, you may often wonder when you will be really “ready” to launch your own startup. You are afraid that life is too short and opportunities are too easy to slip away. But before you are caught in the excitement of a launch, there are 4 questions that you must think through clearly in order to achieve a success.
What idea is worth pursuing?
The best entrepreneurs don’t come up with great ideas, they solve market needs. We can come up with wonderful ideas all day long but unless they satisfy a large enough unmet need, one that can support a business, they don’t do anyone any good.
Know the market and customers cold. Are the pain points true? Has the market been satisfied? Is this business scalable? Where is the market developing towards? Technology is applied in a wide variety of areas today. We need to understand it and learn to use it no matter which area we are going to focus.
It’s better to develop a business model utilizing your most talented skills and experiences, e.g. sales, technology engineering, healthcare, etc, if you want to stay as a CEO; otherwise, even as the founder, you can easily be replaced by VCs when the company scales up.
Who should you found with?
We need to understand that business don’t save relationships. So founding with your spouse, relatives, or close friends usually may not be a good idea. If you do found with them, make sure they have the capabilities you want and set clear principles at the beginning to separate business seriously from relationships.
The most ideal co-founder(s) should be the one(s) who are trustable, can compensate your skills and share the same goals with you in the business. Difficult conversations are needed at the beginning to define your roles and responsibilities, equity split and vesting period.
How should you be funded?
Don’t go into debt to start a business. With debt, if the business goes under, most likely you do. Before you start a new business, you should either have the cash on hand, or have investors who lose their money if the business fails. Make sure all agreements are in writing and that it is clearly stated that you are not personally liable for any money lost by the business endeavor.
When should you found?
Launch as early as you can. You cannot be 100% “ready”. You are only work on your ideas after it is put into action. And you can only then improve the product as it is tested in the market. No business is the same as described in its initial business plan. Most brilliant ideas actually came up in the process of execution.