A New Entrepreneur Needs Your Advice

How many hesitate starting a business for fear of losing everything? Statistics indicate the odds are not in favor of new startups, with the failure rate as high as 70%. So, why bother at all? To answer this question, let us look at a real life example – a close friend of mine who recently decided to launch his own venture.

Meet Kevin the Engineer

Kevin is a gifted engineer who makes $140,000 a year. Over the last 3 years, he has been itching to start a consulting business and has taken every opportunity to pick my brain in preparation. Yet, he always found a convenient excuse to put on the breaks the moment he was ready to launch.

This time, however, he has incorporated, formed alliances with large contractors, is actively lining up customers and filling his pipeline. He is scheduled to start his first independent contract in early 2013. His plans are well thought out and methodical – far more than my own when I started out several years ago. Why are things so different this time?

The Final Straw

Kevin receives calls from recruiters several times a month, which he usually ignores. But a few months ago, a call from a competing company caught his attention. They proposed a position with a more significant leadership role, more pay and a shorter commute. After more than 20 years in his industry, Kevin knows his worth and set his price at 180k per year. Though he was told his number was within range, the written offer came in much lower at 150k. He realized he had hit a ceiling in his career. Even worse, his employer recently announced plans to downsize his department.

Most would think, thank God he had another lined up, but Kevin decided on a different course. He needed to see how far above the ceiling he could go. This provided the final push he needed to step into the world of small business.

The Risks

Kevin has a wife who is a stay at home mom, young children and a new mortgage. Before buying the new house, he had a significant amount of savings but the purchase ate up a big chunk of the funds. For most, this would not be the best time to venture out on their own, and even I questioned his timing.

Then I asked Kevin a question that crystallized everything for both of us. “Assuming the worst and you fail miserably, how difficult would it be for you to find another job earning as much as you earn now?”

Without hesitation Kevin replied, “Not hard at all.” He went on for several minutes explaining why it would be easy, and his arguments were convincing. His numerous connections and stellar reputation as a leader in his field makes him a target for companies hungry for talent. This helped him realize starting his business was a no brainer, and inaction was riskier than the possibility of failing. Then, my favorite Mark Twain quote came to mind:

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do.”

So, What Are Kevin’s Chances?

I am optimistic about Kevin’s chances of succeeding. His preparation and planning go far beyond the typical new entrepreneur. He has advisors with expertise in law, accounting and business management, allowing him to focus on what he does best. Every conceivable piece of paperwork you can think of has been scrutinized. His emergency nest egg, though not as large as before, is more than what most new business owners start with. He also studies my book as if preparing for a final exam. More important is his willingness to embrace the role of entrepreneur, spending the majority of his time promoting his services as he transitions out of his current job. The same companies that tried recruiting him in the past are eager to hire him as a contractor. One of them already has a large project waiting for him.

Never have I had more respect or admiration for Kevin than I do now. How many people would turn down a $150,000 a year job to start a business in today’s economy? How many would take this type of a chance on themselves and go after what they really want? This is not theory or motivational hype. He is a true to life example of those who actually do it.

Still, Kevin is my friend who’s kids play with mine. Our wives know each other and we hang out at each other’s homes. This is not like advising just any entrepreneur. If things go wrong, I will have a front row seat to the drama, which is why I decided to reach out to the SteamFeed community.

So, what is your advice for Kevin? I have directed him to this post so he can benefit from the vast amount of wisdom and experience of this growing community. Go to the comments section, chime in, and let’s help create one more successful entrepreneur.

Godspeed and I look forward to seeing you in The Players Lounge.

Derrick Jones
Derrick Jones is a former Marine, serial entrepreneur of three tech start-ups and author of "Presidents, Pilots & Entrepreneurs - Lessons from the Trenches for the Everyday Entrepreneur." In his book, he chronicles what he calls the good, the bad and the ugly of entrepreneurship with key lessons for beginning entrepreneurs. He is a regular speaker at schools and trade organization on the subjects of entrepreneurship, leadership and technology. He mentors aspiring entrepreneurs on his own time and through his volunteer work with SCORE. He also shares his experiences on his blog www.PresidentsPilotsEntrepreneurs.com.
Derrick Jones

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Comments

  1. ideagirlmedia says:

    It sounds like Kevin has sound experience and has a calculated plan. It doesn't sound like he needs "advice," as much as encouragement to continue reading and learning entrepreneurship and sticking with it when times might get tough.

    ~Keri

    • Thanks Keri. Your'e right. This guy is really sharp and has gone through lots of planning. Lots of encouragement will be needed as he moves forward. He's already learning that project start dates can be moving targets. So, let;s keep the encouragement coming.

  2. The best advice I could give is to completely utilize his online community There is vast knowledge and sharing there Facebook, LinkedIn and Twitter all offer different opportunities to connect with and share with No matter where you are in your journey, you can find people who are right where you are, and/or have been there Be a part of your community and reap the knowledge that is out there

    • Gerry this is one of his soft spots. He has NO social media presence. I've been schooling him on the value of LinkedIn, which I think is more appropriate for the types in his circle. I don't want to overload him, so I am slowly introducing him to social. At some point I may steer him toward a social consultant. His current focus is lining up contracts and solidifying offline relationships.

  3. bundlepost says:

    Nothing worth doing is every easy. In everything there is risk. The greater the risk, the greater the potential reward. I would not focus on the "chances", rather the calculation of and remediation of the risks to improve results. Startups and new businesses have significant risks for sure. If it were easy everyone would do it. I say get after it Kevin. It will be the hardest and most rewarding experience of your business life, regardless of the eventual outcome.

  4. James Oliver, Jr. says:

    Sounds like he has several ducks in a row, including potential revenue right out of the gate. I tip my hat to him for taking the plunge. I wish Kevin the best of luck.

    One piece of advice is to always be improving/revising his business model; he can use the business model canvas to help with this: http://www.youtube.com/watch?v=QoAOzMTLP5s

    • Thanks James. Man, I knew you would have some solid feedback. Funny I told him not to expect much feedback on a Saturday.

      Was I wrong or what. The SteamFeed community is about 24/7 engagement.

  5. Jewel Fryer says:

    As with Felix Baumgartner the first step is the scariest one. Once you are flying you will have a whole new perspective. I don't know as many people who are as prepared. However many of us understand the fear and hesitation. His fear is another sign of intelligence. Life is an adventure, go for it!

  6. Kittie Walker says:

    Sounds like he is ready to fly. Transitioning to having to sell can be a little tricky when you come from a corporate technology background. Lot's of networking both online and offline are what will win the day. Sounds like he is already on that, but you have to keep in touch and keep the momentum up. Making sure that you ease the prospects pain points and speak in their language (not yours) will also help to smooth his sales process.

    • Great points Kittie. One of his strengths is, unlike the typical engineer, he can actually carrying on conversations with real people. He is a very approachable and warm person that people gravitate towards. The social media part is what he will have to work on though.

  7. What took him this long? It sounds like he's well positioned even if things don't work out in his venture. His risk is minimized, and that makes it easier to attack entrepreneurship. The best part of taking this road is that Kevin will never say to himself "what if" …

  8. Daniel Hebert says:

    I've had conversations with a lot of entrepreneurs while I was in university, because I wanted to learn as much as possible. There are really three things that stuck with me:

    1. The idea of "safety" in a corporate job is only a mirage. People are scared of becoming entrepreneurs because of the "uncertainty", and the thought that they won't have a "stable" job. The thing is, you could get laid-off your corporate job at any time. It's a constant paycheque, but it's not guaranteed.

    2. When you jump into entrepreneurship, you're forced to do your best 100% of the time – your life depends on it. When you're at a job, and have a fixed salary, you can do your work well, but anything extra you're not getting paid for. You hit a ceiling with your salary, and unless you get a promotion or a raise, your stuck at that salary. Entrepreneurship gives you a chance to really see what you're worth. Your work might generate a $300,000 salary, and you wouldn't know it until you try to reach it.

    3. Always work on your personal brand, both online and offline. Building a strong personal brand is important – if anything ever happens that your business doesn't succeed, you still have a strong personal brand to show people.

    This was all advice that was given to me by entrepreneurs in different fields (most of them were some type of consultant). I thought it was valuable advice, and am happy to share it with you.

  9. Shayn Baron says:

    Congrats! It's exciting and terrifying at the same time. My husband and I were in a similar situation when we started our consulting firm. It ended up being one of the best discussions we've made as a couple.

    Some advice,

    1. Failure is a stepping stone to success, it's how we learn the hardest lessons.
    2. Have at least one mentor who's been in your shoes.
    3. Don't let fear hold you back.
    4. Embrace social media! Linkedin is great and so is Twitter, FB and G+. I'd recommend writing a blog. (If you can, hire someone.)
    5. Reach out to everyone you know and share your new endeavor. (You'll be amazed at how many of them become clients or refer clients)
    6. No matter how many clients you have always look for new ones.
    7. Don't take on more then you can handle and keep your clients happy!
    8. Build relationships with other consultants and share the work when you can't take on that contract. (they will return the favor)
    9. Prepare to work long hours, days, nights, and weekends.
    10. Break away and spend time with your family, help around the house so your wife doesn't resent you (lol).
    11. Save your money! You may encounter a dry spell or better yet, decide to bootstrap a new endeavor. (like we did :)

    As we grew to a team of 20, we realized we needed a project management solution. We tried using the more popular solutions which didn't meet our expectations, so we created our own. Crocagile saved us and now its become something we want to share. We're in private beta if your interested in checking it out. http://www.crocagile.com

    Hope this helps, I wish you and your family much success!

    Cheers,
    Shayn

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