The Only Thing You Need to Worry About When You Launch a Startup Business

The Only Thing You Need to Worry About When You Launch a Startup Business
April 22, 2016 Brett A. Cenkus
launch your startup lean

What is the single most important thing for you to do when you launch a startup? Incorporate? Create a great website? Develop an awesome logo? Come up with a great slogan? Wrong. Wrong. Very wrong. Wrong. Those things are nice, but they aren’t the most important thing for you to do when you launch a startup.

A Client with the Right Focus When Launching a Startup

I had a “meet and greet” with a prospective legal client a while back. They had launched their startup about six months earlier. The company sells audio fixtures and equipment for music shows and festivals. Its work is top flight, its reputation and brand are growing, and the company has more work than its three founders can handle. After telling me all that great news, one of the founders sheepishly confessed that they hadn’t spent much time getting their legal or financial house in order. He was concerned that they hadn’t done anything along these lines – they had not formed an entity, opened a business bank account, nothing really. They’d been busy making sales. Since launching the business as a startup, they’d been entirely focused on customers and service.

The founders looked at me, waiting for me to tell them that we needed to get right on these things. Wrong lawyer. It is refreshing to see founders with their focus on sales — landing and servicing customers. Many startup founders spend too much time behind closed doors, tweaking pro forma models, sprucing up pitch decks, writing wonderful form customer contracts, fine tuning logos, etc. All these things have value, but they are a distant second to getting out and finding a customer or two or ten. That’s priority number one – get a customer, make a dollar. Launching is about hitting the market and interacting with real customers.

Why You Can Wait to Form a Legal Entity Later

I can hear you now – “But, Brett, if I don’t form a corporation or limited liability company to house the business, I’m personally liable if something goes wrong.” Yep, you might be. But you are also going to be personally liable for a business failure if you spend all your time focusing on back office stuff and don’t get out there and bring in some income. Besides, I am not aware of one single company with no operations and no revenue that ever got sued.

A lot of the things that lawyers, accountants and marketers will offer to do for your startup can be staged. You can spend money on those things when a little money starts to come in. When a lot of money comes in to your business (and you’re no longer a boot-strapping startup), you can put even more money into legal protection, financial systems, a fancier website and a more well-considered logo. When you launch a startup, focus on the right things — customers.

A Bias for Action When You Launch a Startup

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries garnered a lot of attention when it was first published in 2011. What I love about the lean startup method is the focus on action. Do stuff, try stuff, figure out what works, iterate. Put products and services out there, sign up customers, gather feedback. Don’t spend two years behind closed doors making your product perfect, particularly if you are creating a new product or service the market hasn’t seen before. Guess what? “Perfect” is perfect in the eye of the beholder. The market may flat out not want what you are building, at least not in the form in which you are planning to roll it out. So make something and get it out there. Keep some of your powder (money) dry to make changes based on market feedback. The startup process demands action.

In the business classic, In Search of Excellence: Lessons from America’s Best-Run Companies, Tom Peters and Robert Waterman, Jr. identified a common attribute of hugely successful companies – they have a bias for action. They try stuff, they learn from it, they tweak things, they try again. They aren’t afraid to fail, and a lot of the failure should occur in the marketplace, with real customers. That book looked at some of our country’s most successful and enduring businesses, but the advice applies to startup founders, as well.

My Own Personal Mistakes

When I launched a mortgage company in 2001, my first startup where the buck stopped with me, I initially spent too much time behind closed doors when I should have been out selling. I was fresh off a stint with one of the largest corporate law firms in the world. In the world of high-end law, you spend a lot of time making things perfect, dotting your i’s and crossing your t’s. That’s what our clients wanted us to do and they were willing to pay us well for the time and effort. Every deal was heavily staffed. Documents were revised again and again, fixing punctuation, making everything beyond perfect.

That mindset is in sharp contrast to the “get it done” mindset most startups should have when they launch. I brought that bias-for-perfection mindset into my new venture and it cost my company the strong start it needed. Plus, there was that part of me that didn’t want to get my hands super dirty, wrangle with customers, etc. I wanted to build something pretty and let others do the heavy lifting. I wanted to play puppeteer and direct others from on high. Customer service? Sales? Ugh. Can’t someone else do it?

Back to Your Website and Logo

Think you need your website just right to get out there? Afraid to show up without your business cards, which are still at the printer? Think your logo needs a little work and don’t want to launch without it being finished? Get over it.

“But, Brett, what will I say when they ask for my business card?” How about, “I ran out.” Or, “I’m having more printed.” Don’t feel comfortable with those responses? How about, “Business cards? We’re not using those anymore. We’re getting ahead of the curve. They’ll be extinct within three years.” They may just be. My point is, don’t use waiting on business cards as an excuse for not getting out there and landing customer number one, then two. The rest of this stuff is playing business.

As for your logo, no one really cares about your logo. Sorry. The mantra that “Brand is everything” may matter one day if you focus now on the important things. If you focus on the wrong things now, like making a pretty logo for a startup company with no customers, your brand will never matter. Your logo isn’t going to make the difference in whether or not you close your first sale or your second. If you want to hear where I recommend your lean startup get its logo, check out Where to Get Your Logo – Cheap and Fast.

If you just love this part of business and have the time and money to make a pretty logo, go for it. But don’t kid yourself into thinking that it matters all that much and don’t do it in lieu of doing the hard work of landing a customer.

Back to Those Personal Lessons

I learned my lesson in the mortgage company. That was a tough startup experience. We burned through our capital quickly after we launched the business and our perfect logo, ideal form independent contract agreement, and meticulously organized company files weren’t recognized as currency by our vendors. Those were some lean days for me. If you have more money than Google, you may never have to get your hands dirty. But if you don’t have a bottomless coffer, you need to have a sense of urgency about getting out there and bringing in customers (and, if you’re the leader, you better be out there showing your team how it’s done and learning what matters to your customers). We got it turned around eventually. Along the way, I happened to learn a thing or two about what our customers wanted. Imagine that: a company president who understood what it was like to be on the front lines.

Yes, I learned eventually. But I am hoping that you don’t have to struggle for a couple of years while learning the hard way like I did. Tweak your pro forma, spruce up your pitch deck, get the messaging on your website just right, but get out there yesterday and land a customer. Bring in the first dollar. Yes, you. Get hungry, get dirty. Interact. Try. Learn. Tweak your offerings. Sell more. Get it done. That’s the way to launch a startup. Everything else can wait.

Brett is The Startup Shepherd™. He has 20+ years of experience in business law, entrepreneurship and finance. He spends most of his time on startups, joint ventures and mergers & acquisitions. Brett believes there are a lot of dumb questions, but we should ask them anyway, along with the challenging ones (and sometimes it's hard to know the difference). The real travesty is silence when you have something to say.

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