6 Unexpected Startup Lessons

Guest Post by: Lisa Hodges

I was hesitant to write another in a long string of “_ Number of ideas for your startup” posts, but then I decided that I am always hungry for more.  Hopefully there are some new insights that will be useful for you if you can anticipate them.
1.    How to handle and (more importantly) work with your competitors.
Depending on your business (especially if it’s service-based), your relationship with competitors will be much more nuanced than a simple to-the-death competition.  Learning from them is a source of free advice, since they are already established players in the field.  Also, differentiating yourself from their offerings is a great way to hone your ESP.  Many service firms are also open to sharing projects, outsourcing portions of them, profit sharing, knowledge sharing, etc.  Don’t count out these rare opportunities for business.
Many of our initial clients were considered too small or outside of the range of several of our competing firms, so they were passed on to us.  During the crucial first six months, these “leftovers” brought in needed money, developed our client base, and allowed us to  smooth the kinks in our client processes.

2.    Unexpected legal hassles.
I trusted that the advisers we had hired (on recommendations from others) were up to date on complicated issues, such as foreign-national partnership rights and sales tax registration.  Misinformation from them led to a lot of trouble down the road.  Always double check with a second opinion, and better yet, learn the laws yourself to avoid this.

3.    How a partnership will affect your friendship.
I cannot stress this enough.  First, you will be spending more time with this person than with your family members or friends.  Moreover, this time will be spent under extreme duress with financial and personal ambitions on the line.  I learned a lot about myself in those situations, and not all of it was good.  The same will be true for both you and your partner.
You can’t prevent all conflict, but what you CAN control are expectations and vision at the beginning of your venture.  Ideally, you and your partner should have the same goals and vision for the company.  Lay these out explicitly on paper- defining these through conversation can hide underlying misunderstandings.  Even if you both have different motivations for entering into the entrepreneurship, the end-goals should match.
Also, you should have complementary skill-sets.  This will help you avoid grudges over who plays which role.  These roles should also be clearly defined on paper.  When things get tense during a stretched financial period, these definitions are a great way to determine who the ultimate decision lies with.

4.    The company will change directions.
The first challenge is learning when it is time to change directions, and the second is communicating that clearly.  This is important both for you and for your customers.
Joint Leap started out as a typical web development company for NGO’s and SME’s.  We were afraid to limit ourselves to just NGO’s, and we thought web development and social media would be sufficient offerings.  It turns out we were really good at working with NGO’s, and focusing on them became our strength. Also, the value of what we could offer stretched far beyond website building.
If you are good at listening to your customers, they’ll tell you when you should change directions.

5.    Hybrid structures mean underlying conflicting motivations.
If you are planning to start a hybrid (part non- and part for-profit entities) you probably think you understand this already, but it will come up more often than you think. The way nonprofits and companies make decisions is very different, which makes it hard to determine the basis on which you make decisions.  We decided early on that the nonprofit would never sacrifice its values or decisions for the business, which was often a challenge.  Everything from hiring to deciding which projects to take on became subject to both a business and a moral debate.

6.    Your role when the company is getting started will be drastically different from your role when the company is established.
When you’re starting up a company, all of your energy goes into that.  Your stated role can be what you want, but in reality you’re selling all the time, marketing all the time, and working out all the essential business processes.  As much as I might have complained about having to complete all the menial tasks (running down the street in 100+ degree weather only to desperately search for the Hindi words for “6 copies please?”), there is a certain high you get from doing everything yourself.  Every decision is major, every day a challenge.
When the company became better established, I shifted to doing marketing and sales as well as filling a gap in our organization by taking on some project management.  Definitely less sexy.

The time comes when you have to make a decision- stay and accept your new role, or decide it’s time to move on.

1 thought on “6 Unexpected Startup Lessons

  1. Pingback: 6 Unexpected Startup Lessons « Stratessence : Startup advisory and products

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