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10 Reality check questions for Entrepreneurs

The idea of starting and running your own business is seductive.

I'll be my own Boss, work the hours that I want, become world renowned, be independent, be rich, be a somebody.

Here's the reality check and just a glimpse of what you can expect for around 20 out of your 24 hour day.

Incredible stress, anxiety, doubt, heartbreak, sleepless nights, emotional roller coasters, destruction to relationships, lost friends, embarrassment. And how about  failed marriages, financial ruin, lawsuits, failing health, creating family rifts, social isolation, unrealized dreams, favors for family and friends, guilt, and the always painful "if" thoughts ("If I just would have..." "If he just could have..." "If I had just bought..." "If the bank just would have ...." "If the customer had just....

My personal driver has always been to target markets where I can make a difference. For example the thought of being a property developer has never really stirred me, developing an online marketplace that brings financial services to all 'floats my boat'.

Here are just a few reality check questions you should ask yourself before you embark on what is a lifetime commitment.

1. I am willing to lose everything.
2. I embrace failure.
3. I am always willing to do tedious work.
4. I can handle watching my dreams fall apart.
5. Even if I am paralysed with the flu and my mother passed away last week, there is nothing that will keep me from being ready to work.
6. My relationship/marriage is so strong, nothing work-related could ever damage it.
7. My family doesn't need an income.
8. This is a connected world and I don't need alone time. I want to be reachable 24/7 by my employees, customers, and business partners.
9. I like instability and I live for uncertainty.
10. I don't need a vacation for years at a time.

Next 10 tomorrow.

Part 2 of the questions you must ask a potential investor

This may come as a surprsie to you but you know the moment you get that warm fuzzy feeling when you get told ' we really like your product' or ' we love the team you've put together' and the best of all' we want to invest in your company and take you all the way'.

Someone wants you? 

No - someone wants what is yours.

The problem is that for msot companies out on the investment merry- go- round by the time they have reached the point of an offer being made they are what you might term as calorie deficient , yes thay have run out of cash.

So its understandable that you are going to want to take whatever offer is on the table.

And maybe you don't have a choice. But at least armed with the answers to the questions below at least you know which type of shark you are going to be in water with and just how deep that water is likely to be.

1. Provide a list of every founder whose company they have ever invested in, and contact information for each. Insist on this, and contact each one.

2. Ask them why most of their portfolio company websites do not even list the founders any more. Ask what happened to each of them, and what kind of relationship they still have with them.

3. Ask them how many founders were terminated vs voluntarily stepped down, and realize that what is formally said is often not what really happened.

4. For intellectual property (patents) that you will be required to sign over to the company, ask them how much they intend to pay you for it. DO NOT sign it over to your company for free.

5. Ask them how many of their companies still have the founder on board in some capacity. Ask why the others left. Ask how many they have worked with in more than one company. Ask to speak to every remaining founder, not just the ones they willingly provide. Be aware that many of these founders will be wary, and fearful of retribution.

 

First 5 questions you should always ask a potential investor

So you have got through the first round of presentations. You've done a good job pitching your company, your team, your soon to be world leading product and the trillion dollar market you are going to break into.

I remember only too well the marathon that you have to run with minimal calories to get to the funding line.

 It's hard, it's uncompromising, and very few even make it to anything even resembling an offer of investment.

So when you get to that stage , [you know the one where your future investor talks of wanting to make an offer and issue terms] it is oh so tempting to collapse at their feet in relief at the sight and smell of those badly needed calories to keep you alive.

But [ to keep with the food analogy ] not all calories are good calories. And as I discovered a while back your angel investor once in may be anything but angelic.

Here is the first part of a whole bunch of questions you may want some answers to before you take the money.

1. How many founders have been replaced as CEO in their portfolio companies to date? Make them give you an exact number, and pay attention to their response. Ask this to their face.

2. Have any or how many founders have sued them or their own company? For what? How many went to trial? How many settled? How many founders have they sued and why? Ask to see the suits. How many of their own employees have sued them? How many lawsuits has their company had (by other companies, partners, investors etc.)?

3. What percent of the company did each founder end up with at exit? Median? Average? For current portfolio companies, what is each one's current percent? Ask the founders this as well.

4. How many rounds of funding has each company received? What is the average, and median?

5. How many years before exit for each company? How did each company exit, specifically? How many exited with nothing to the founders? How many went bankrupt? Ask them not to focus on the big wins, but on the others.

The above are all questions that will test the true entrepreneurial spirit and culture within your investor and how closely that matches your own- especially when the going gets tough which invariably at stages it does

Part 2 next week.

Life's a pitch and then you buy one.

Our world is laden with acronyms .

You need to know your CEO  from your COA if you want to communicate in a credible way - apparently.

COA is a new one that I have come across that stands for 'Chief Adoption Officer' , that means making sure your customers use your products.

In other words [and I understand this term is now outlawed in management circles] that means selling to your customers.

It appears now that the only market positioning in which the word 'sale' is permitted is in the retail trade, and even that conjures up some very negative connotations.

Even the world's most successful SaaS business Salesforce.com has has a minor branding overhaul and are now known as Force.com, note the subtle dropping of the dreaded 'S' word.

Head of Sales in your company? Not any more you're not. You've now become the Chief 'Revenue' Officer which you could argue carries even more negative connotations and yes it does mean you sound like an upgraded tax inspector.

Part of the problem is that people hate to be sold to, they will always prefer to buy.

But in order to make an informed buying decision a sale has to occur, and the start of that process begins with the 'pitch'

In any company everybody should be able to deliver the company pitch.

In fact delivering a pitch about your company, your idea, your product, or yourself is one of the most powerful skills you should and have to master.

And anyone can deliver one.

Here are the 5 key elements of a great pitch.

1. Less than 45 seconds long.

2. What does your product/company/you actually do?

3. What impact have you or do you plan to have?

4. What is the market you are targeting and why?

5. What makes you different?

Whether you are raising investment, introducing your company, meeting your customer for the first time, or writing your CV delivering a pitch, or selling your story is a fundamental skill you should adopt .

Five ways to face up to your critics

Yes its 'Mirror Mirror on the wall ' time.

Who is your biggest critic?

In my situation its become a crowded field over the years but despite stiff competition I give myself a harder time than anyone else has- yet.

And as an Entrepreneur I find myself under fire at regular intervals, in the main deservedly so.

So here is what you can do when you are facing criticism, whether you are a leader or you have simply not lived up to the expectation of you.

1. Show up. Let your critics see you for the leader who you are. Adopting a "hide in the bunker" attitude only plays to them. It gives them free rein to paint you however they like — demon, demagogue, or do-nothing. By showing up you demonstrate that you are not afraid.

2.Be open. If you are wrong then say you are wrong. Watch the person who tries to bluff their way out of a difficult situation and how rapidly they not only lose others respect but their own self respect too.

3.Be cool.When people criticize you to your face, breathe deeply. As an opponent's voice rises, lower yours. Speak deliberately and with a sense of calm. The more control you have of your emotions, the stronger you will appear.

4.Acknowledge your shortcomings.Standing up to criticism is an opportunity to admit your own failings. That isn't the same as being 'wrong' in  a decision you have made. Do it with a sense of earnestness, that is, demonstrate through words and passion that you have done what you think is best. At the same time, do not be defensive. Act with honest confidence, even when you admit mistakes.

5.Never pass the buck. Unhappy customer? Deal with it personally. Staff morale low? Speak to the peron/people personally . In fact invite people to criticise you, in a constructive way.

Every month I review what my role is and how I am doing against it, and what I have to do to improve.

Then I talk to some other people who matter to me and compare where I need to improve.