(Editor’s note: Farid Naib is CEO and Founder of Document Depository Corporation and an angel investor. He submitted this story to VentureBeat.)
I have been described as a “serial entrepreneur,” which makes it all sound easy and full of success. But what I have found is that, whether it is my first or seventh endeavor, starting a new enterprise is exhausting, ego shattering and (at times) infuriating.
But it’s also one of the greatest thrills in my life.
After more than 25 years, I have learned quite a few lessons. Here are my most valuable five:
Just do it – Nike may have trademarked the slogan, but the sentiment is universally applicable. So much is never accomplished simply because the idea generators are overcome with the paralysis of inertia.
There is an old Chinese proverb that says, “The best time to plant a tree was 20 years ago. The second best time is now.” Sitting around thinking about your great ideas will never produce anything. You have to act. Do some research. Build a prototype. Create a website. Network with colleagues. Start somewhere.
What often holds our ideas back is fear – fear of failure and the unknown. Your tree will may not be full-grown tomorrow, but if you plant it today, it certainly has a future.
Be willing to fail and try again – The fear of failure is a powerful de-motivator, but whether your business idea is ultimately a boom or a bust, you will gain valuable insight from the journey. I have learned many lessons with each of my start-ups. Early on, I learned about the perils of over-promising to clients.
My very first company, which provided lighting for concert venues, once agreed to light three separate shows even though we only had two complete lighting rigs. I thought I could wing the last one, using makeshift gear borrowed from other companies. Not only did that third show fail, all three concerts that night were disasters. I never again promised more than I could deliver.
Being able to pull back from a situation and assess why something went wrong is how you gain wisdom through experience. Don’t let your pride stand in the way. Be willing to admit you made a mistake and then exercise the strength to carry the difficult lesson with you so that you will avoid it next time.
The best valuation may not be the best deal – For those considering outside investment, whether angel, venture capital, or private equity, educate yourself on deal terms. Many inexperienced entrepreneurs agree to terms which are not favorable to them simply because they don’t know any better.
Learn about liquidation preference – participating versus non-participating. Above all, don’t let dollar signs fool you. Just because one investor provides a higher valuation than another, doesn’t mean that they are offering you the best deal in the long run. I have learned firsthand to do a pre-deal calculation myself to really understand how “great” a deal I might be getting.
Growing pains are real – It has happened every time. I have gotten my business rolling, revenue is increasing, and I am hiring new employees. Then the growing pains hit. If one thing is certain in the entrepreneurial world, change is constant. The management team that got you to $500,000 in revenue will, in all likelihood, not be the same group of people who can get you to $2 million.
One of the hardest parts of growing your company is knowing when you have to pivot your team. Companies also experience phases of growth with accompanying plateaus often around $2 million and $10 million in revenue. Changing management can help overcome these plateaus, as will proper planning and awareness of the potential for leveling growth.
Don’t be afraid to ask for help – Even if your business is developing a fancy SaaS interface for social media widgets, the small shopkeeper in your neighborhood may have some insights that can benefit you.
All businesses face the same types of issues and problems. Every day, I ask myself the same questions: How do I adapt to a changing marketplace? How do I get my message out and reach potential customers? How do I turn first-time clients into happy, returning clients? Practical, firsthand experience from those who have already been through it is definitely the best kind. Use your network. Talk to people who have been doing it a long time and be willing to consider that you may be wrong.
Let’s keep the conversation going. What lessons have you learned from your business experiences?
(Farid Naib is CEO and Founder of Document Depository Corporation (DDC) which develops online software solutions that enable management teams, boards and investors to store, share, and secure their critical data for greater governance leading to a premium. Mr. Naib has a long history of entrepreneurial activity. He began his first company at 17, providing lighting services to rock bands, including BB King and The Police. In 1992 he founded FNX Solutions, a leading provider of fully integrated, global trading and processing solutions used by the world’s largest financial institutions. Mr. Naib is an active angel investor and advisor for a variety of companies and sits on several boards.)