Quick background: I started BrentOzar.com as a blog over a decade ago, and today it’s a successful consulting company that gets tens of thousands of spam comments per day. I failed at a few other side projects before that. This post is a brain dump for IT people who are thinking about starting their own thing.
Most of the people who start businesses do it for the love of what they do, not because they want to go into finance, sales, and management.
Most founders (myself included) have no idea what they’re getting into.
That doesn’t mean they’ll fail, though, because passion and hard work can get results. This is why founders say that ideas are worthless – anybody can have an idea, and it doesn’t matter if a million people steal yours. Execution is everything.
Many people who profess to know a lot about business – their business or yours – are bullshitting you. Get good at critical thinking, and use it when you read your own business plans or product ideas.
Most of your suppliers and customers are faking it just like you are. (Again, that doesn’t mean they’ll fail.) The key is looking at their knowledge and their passion and their work ethic together as a complete picture. The more pieces they have, the more likely they are help you.
Be friends with everyone in your market. Being a jerk to your competitors doesn’t make you more likely to win. Your customers would rather see you on great terms with your competition – well, right up to that whole price-fixing thing. That goes a little too far.
Build your own Gartner Magic Quadrant report for your competitors. Your savvy customers can name half a dozen of your competitors – shouldn’t you be able to?
Companies that do the same task aren’t necessarily competitors. You don’t make money for doing a task – you make money because someone wants to pay you to make a pain stop. Competitors are companies that – regardless of what tasks they’re performing or products they’re selling – relieve the same pain for the same people.
The more vague your product or service description, the more competitors you have. “We can do anything to help!” = “We’re the same as everybody on Fiverr.”
Some of your customers have never heard of your real competition. Never talk about your competitors until your clients ask, and even then, don’t do it. Talk about your unique awesome selling points in a way that your competitors can’t address or impeach. Your knowledge of your competitors is only to help you know yourself better.
Every time you lose a sale, ask why, and to who. Don’t be afraid – you’ve already lost the sale. Most of the time, the prospect will actually tell you. It doesn’t mean you have to do anything about it, though.
Understand what products your customers buy from other mature, large suppliers that don’t compete with you. Look at the dominant competitors in that market, and learn how they got into that good place. Learn what you can from their tactics, because they’ve figured out how to market to your customers.
Rules are usually there to help your already-established competitors.
Employees and Money
Find people who would make you feel stupid if they weren’t so doggone nice about it. Make them your partners, employees, customers, and suppliers. The first few times you’re tempted to second-guess them, remind yourself of why you’re in a relationship with them – they probably just don’t have the time to explain the basics to you. Let the results surprise you.
Your employees are talking about you when you’re not around. What they say is up to you.
Sooner or later, employees are going to leave you just like you left other companies. Between the time you hire them and the time you part ways, make great memories together.
Pay cash. If you spend ten minutes worrying about how you’re going to pay the loan, that’s ten minutes you’re not focused on your employees, customers, products, and family. If you can’t pay cash, it’s not the right buy for you yet. (I’m writing this for knowledge workers, not factory builders.)
Employees cost six months of their salary. If you can’t pay that cash, you can still hire them, but be exceedingly clear with them about the risk. Not your risk, you vain jerk – theirs. Employees are taking risks too, and you want to make sure they’re excited to take the right risks for their financial situation.
Every month, read your Profit & Loss statement and your Balance Sheet.
If your financial success depends on every customer paying/staying/growing and every vendor delivering, you’re going to fail.
There is never enough time to do the right thing by everyone.
Start by doing the right thing by yourself and your loved ones. For that, carve out recurring weekly non-negotiable time. Everything else is a messy, ugly free-for-all, and it never gets better.
There will always be people who want to talk to you one-on-one for free. They want to convince you to give up your cash or your knowledge. The most powerful line in this situation compliments them instead of focusing on yourself: “I know your time is valuable, so let’s cut right to the point: what do you need from me?”
Read book summaries. Most books are one-page blog posts trying to make a profit.
The first time you start something, you’ll be overly focused on keeping all of the equity for yourself. You’ll likely fail because one is the loneliest number. If you’re not accountable to anyone else, you’ll do crosswords instead of building the business.
The right partners make you work smarter and harder.
You don’t really know partners until you’ve failed at something together, and you probably don’t even know yourself until then either. Protect everybody with a great legal agreement.
Come up with a single metric that defines whether you’re gaining or losing. Later, you can add metrics, but start with one.
You’re probably going to fail. Repeatedly. (I did.) That just gives you more knowledge on how to succeed next time.
Have a success plan and a failure plan, both triggered by thresholds of your metric over time (like zero customers gained over three months). When you enter into contracts or corporate partnerships, define the metric, success plan, and failure plan too. Think of it like a prenup, except it’s much more important here than in marriage because there’s no default rules on who gets what when companies break up.
The quicker you can move on to your next accomplishment or attempt, the better. Floundering is for fish.