The Yes and No Thinking in Entrepreneurship
As an entrepreneur one wears many hats and hence must make many decisions. Most times it is tough to decide, whether to say yes or no to a particular strategy, opportunity, funding round, taking loans, expansion plans, collaboration, partnering, hiring employees, having a co-founder, parting with equity, working from home, working from a co-working space, virtual office, having a mentor, attending startup events, networking, friends and family.
Let’s look at these in more detail
Strategic Decisions and Opportunity:
Entrepreneurs start with an idea, and with time the idea evolves, things change. What one started with keeps evolving with time and calls for taking certain strategic decisions.
Yes: If the decision or the opportunity is in line with the core values, vision and mission of your idea/startup/business, then it is good to go ahead with the strategic decision that’s to be made.
No: Sometimes entrepreneurs come over upon crossroads where one must either take a decision or pursue and opportunity that is against the core values and fundamental operations. For example, it may be a decision to start dealing with a category of customers to gain market share and in order to increase revenue or cut costs by compromising on quality. These may seem attractive options to start with but may not be healthy for the bottom line.
Funding from Friends and Family, Angel Investors, Venture Capitalists or Taking a Loan from Banks or Financial Institution:
The most difficult part in a startup life cycle is not acquiring funding, but its about managing the funding. Managing the cash flow in a business will determine the health and longevity of the business.
Yes: If the Entrepreneur has an idea, product or a service that cannot be launched or cannot scale up without external funding, then the first thing is that he or she must have a detailed plan towards how much of fund is required, how it will be used and what are the returns. Only after a detailed financial plan is worked out must one say yes to any funding options in the offering.
No: Entrepreneurs need to assess the funding requirements internally, if they have the bandwidth to generate the kind of funds organically, with which they can operate the business or get into expansion then that must be the first choice. Cause external funding comes with conditions that may not be in sync with the entrepreneur’s vision and mission. And hence it makes sense to say no to external funding even if someone is willing to invest their money in your idea or business.
Understanding the market is very important in order to take decisions about expanding production capacities or business operations.
Yes: If the market research shows a genuine increased need for your product or service then one must think about expanding production or service operations. Also, whilst thinking about expanding one must understand the day to day management aspect of those expansions. One must have the resources and manpower to handle the smooth functioning of the business after having expanded business operations or production capacities
No: Assuming that the customers will come later, we need to be present their first, is a risky option. It may or may not work that way. If you are basing your decisions about expansions based on unproven or unvalidated assumptions, then its best to say no to any expansion plans.
Everything is interlinked in this world; one leads to other. Businesses are connected and share similar target markets. Entrepreneurs may find opportunities to collaborate or partner with fellow entrepreneurs or startups that could add more value to the customers.
Yes: Firstly, you should look a culture match, cause you may find the vision, mission, product and service compatibility but the work culture compatibility is also very important. Secondly you should go ahead if you find that the collaboration and partnership is for a long term, best when it is done for the life of the businesses, you will create a better brand image in the mind of the customers by showing that you have collaborated or partnered to provide more value to the customer going forward.
No: You should not go ahead with a collaboration or partnership if there is a cultural mismatch and also if the motive is only for a short term cause doing it for the short term creates a bad image in the customers mind where in it may appear that the companies are trying to profit by collaborating or partnering momentarily and those benefits may not be available once the partnership is broken.
Hiring Employees, Having a Co-founder:
Team stands for Together Everyone Achieves More. For Entrepreneurs it is very crucial to have the right team in executing his or her idea and running the business.
Yes: If you have put in the work yourself and understood how something is done, and only when you know that you can now hire the right person and delegate it to him or her cause you have to get down with the next set of important roles, that’s when you must decide to hire an employee. Have a co-founder to fill up the core skills that you lack, if you are creative then you probably need someone who is analytical and logical, if you are technical, you need someone who will handle the commercial end of things.
No: Do not hire if you do not know the roles and responsibilities yourself. It is always expensive to hire and then fire. Do not have a co-founder for the sake of filling up the skills you lack, whilst the vision, mission and mindset do not match.
Parting with Equity:
In the early stages of starting up, entrepreneurs may not have the option to pay full salaries to team members and so they add an equity component to compensate them for their time and efforts.
Yes: Part with equity only with critical skill sets. If you have to part with equity across the floor, then do it mindfully by considering the skill sets of the team member.
No: You don’t want to part with equity if the team members are not reliable, and if you fear that they could cause problems later. You don’t want to part with too much equity in order to avoid complications in buying back the same at the later stage, either due to the team member not willing to sell or asking for a higher valuation to part with.
Working from Home, Working from a Co-working Space, Virtual Office:
Initial stages of an idea take birth whilst working from home out of the dinning table or the garage. Gradually with momentum one considers moving to a co-working space or have a virtual office.
Yes: If you want to have minimal overheads then its best to start with working from home. But you need to create an environment, set a routine and have a disciplined mindset that distinguishes between work and home whilst working from home. If you have the resources and can’t accommodate them to work from your home, then you may consider running a virtual office by providing the necessary internet access to the resource. Or if your resources are required to work alongside you then you can opt for a co-working space, which may seem costly but will include lots of facilities that you don’t have to bother setting up.
No: If you cannot find the right atmosphere to work from home, if you cant manage to provide the tools for running a virtual office, or if the team cannot get to the co-working space then its best not to look at these options and stick to your day job.
Having a Mentor:
Everyone needs some guidance now and then. Entrepreneurs need that often as every day is different, many challenges to face, hence looking up to some one you consider as an idol and someone you aspire to be, someone who is now in a position that you aspire to be in the future.
Yes: If you are stuck and need mentoring then make sure that the mentor has the expertise that can solve your problems, can guide you. Make sure that the mentor has experienced similar challenges.
No: Be your own mentor, as you know yourself better than anyone, and if the problem has come to you whilst working on something, then the solution is also bound to come to you whilst working on it. It’s about being patient and persistent in finding the solution. So, then it’s better not to look for a mentor outside.
Networking and Startup Events:
Meeting likeminded people sharing and learning from each other’s experiences is important for Entrepreneurs.
Yes: Attending events and networking is time consuming and may also involve costs. Also it may not deliver immediate results, as it is mostly about relationship building and not about immediate selling or buying something. So, if you have the time and money to invest in networking and not worried about the results, then you should go for it.
No: Starting up requires lot of time and energy, and in terms of money, one is usually bootstrapped until the cash flow is sorted. So, its better to focus on getting the startup up and running than wasting time on networking or attending events. Cause no one will take you seriously until something is proven.
Friends and Family time:
Randi Zuckerberg calls it the Entrepreneur’s Dilemma where in you have to choose any three between work, family, fitness, friends and sleep, you cannot do everything, you have to sacrifice certain things for a few years.
Yes: Say yes to all those activities that involve work, family, fitness, friends and sleep and enhance your entrepreneurial journey.
No: Say no to all those activities with work, family, fitness, friends and sleep that do not enhance your entrepreneurial journey.
But better yet is to choose the three most important out of the five. For me it will be work, family and fitness always.