Advice for First-Time Entrepreneurs
I’m doing a Friday business Q&A. To ask your question, email me here.
[This writer is a young programmer whose specific ideas have been redacted]
The way I figure it, I need my startup to make 40k/mo in order for a good enough valuation when I sell it that I can gain the capital to start [this other business idea]. Do you think [this idea] is worth 40k?
I think given your experience, betting on any idea being worth 40k a month to you is likely to end in tears. That’s not to say it’s not possible, but I wouldn’t want to play those odds.
What I would do instead is take a good idea (with ‘good’ defined as an idea with an 80% chance of paying its own way), give yourself a month to test it: see if people are willing to pay for it.
If that checks out, give yourself 6 months or so to make it viable. You should be able to get at least a minimum viable product to market, and then proceed to test and tweak the software while optimizing business processes (E-Myth Revisited has a good explanation of how to go about this.) It might take you a while, but eventually you’ll have a business that runs with very little intervention from you.
And then you can start another one.
I know that you want your 40k idea to raise a bunch of capital for this bigger idea, but the problem is statistical: You have let’s say a .1% chance of getting a business to hit this target, and since you’re building it to sell, if you miss, you’re very nearly back where you started.
In addition, working with that much capital is very much a confidence game, and you’d have to be ballsier than me to not feel like 10 times the gain equals 10 times the risk. It doesn’t– but it’s hard not to feel that way when you’re throwing that many zeros around. It’s really something that takes some time to wrap your head around.
I personally recommend picking a good idea and grow it as far as it can go. Some ideas have a growth ceiling, and it’s hard to know what they are until you’re really in the thick of them.
Pick an idea, optimize the hell out of it, getting it as passive as you can. Then pick another and do the same. (Amy Hoy at Unicorn-free is a great example of this). It might take you longer to get to your capital goal, but you’ll definitely get there. Gambling on a single idea will most likely mean several false starts, an extremely demoralizing prospect.
[This writer is a young entrepreneur whose first two business ideas turned out to be non-viable, and is currently on the hunt for the next one]
Well, In a nutshell I’ve been working on several business ideas and mostly failing a lot haha.
Spent hundreds of hours on a couple projects in the past 6-12 months that failed and it was time to pivot or ditch. And now I’m working on a project with a friend/business partner who is living in Russia — his computer got smashed and he’s acting a little flakey now so I don’t know if he’s going to follow through with our current project (kinda sucky, seeing as I’ve invested 1-2 hours a day for the past 9 months).
So I’m slowly working on that track record, but I guess I suffer from the same wantrapreneur-based illnesses that everyone else has — what specific skills do I have, what do I start a biz about, what skills do I need to learn, etc.
And yeah I can’t honestly make products to free people from the rat race, because like you said, I haven’t done it myself. And there’s that whole sleazy trend on the internet of people making money off teaching people how to make money. Totally retarded.
In any case I don’t see the point in starting another generic SEO/Online consulting business even though it’d be easy. Unless I end up meeting people in person and they really need help turning a brick-n-mortar into an online business.
Basically, I’m just in detective mode at the moment. Any advice?
Well, I have no idea of your particular aptitudes, and I think the best business ideas tend to materialize in a blast of inspiration, but I will say that in my view it’s not so much about the skill set as seeing an opportunity to fill a need. When you build a business around a skill, you’ve built a business around your own needs. When you build a business around a market opportunity, you’ve build a business around your customer’s needs.
However, as the person who has to do all the work, the business needs to meet your needs as well.
And if it was just about solving a problem and getting paid for it, well, a lot of companies have an SEO problem. There’s an intangible that you want from your business that probably has something to do with helping people along the road to self-actualization. But only you can answer that question.