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Bill Liao – 3 Common mistakes for startup companies

May 17, 2010 | Posted in Entrepreneurs, Social Media | View Comments

[A post from Bill Liao,  serial entrepreneur, philanthropist and Co-Founder of Xing.com, a business social network with 10 million subscribers. Bill is keynote speaker at the IIA National Conference this week.]

Over the years I have been involved in a lot of successful start-up companies and while most of what I write about is to do with how to do things better, for this guest blog for Ian  I thought  I would share three common mistakes I see being made by the founders of start-up companies

Starting off poor

While it is perfectly possible to start your own business from scratch, Alex Smith started Alara foods with two pounds that he found on the street, the truth is that its really hard to start an effective business if you have no resources at all. A very common mistake I see founders make is to borrow as much money as they can rather than keep their day job.

Starting your own business will be the hardest work you will ever do so why not keep your job until you have sufficient cash flow to move across? You will end up pulling some all nighters, and guess what? You will probably do that anyway and the stress of earning money while you build your business is far less than the stress of living off food stamps.

If you build it they will come

The number of times I have seen people hold back from exposing their precious first product to their customers because it is not yet perfect I can’t even count. Even the most innovative products in the world generally needs a few goes to get right. One of the most impressive product launches I have ever seen was the Apple iPhone and yet even the design gods at Apple needed a few goes to get to the 3Gs model and the even better iPad. They had the entire resources of Apple behind them in a world that is geared up to produce engineering marvels and still requires some iterations. Steve Jobs and Steve Wozniak launched their Apple one computer, back in the day,without even a case, you had to build your own out of wood, and yet they sold these machines successfully from the very start and they got good at improving them as they went.

Instead of building your product and trying to get it perfect, or even half perfect, launch it fast, launch it now, and get it in front of paying customers right away. I am not saying have it full of bugs or badly coded or shoddily built. I am saying instead launch it with one tenth of the features you dreamt of, launch the bare bones with only the most vital features and see what customers like and don’t like. You can add more features later (better still try to add functionality without adding features at all) and this way not only do you get a better product, you reduce your development time and costs and get to cash flow faster than you would otherwise. One of my mentors used to tell me that if there isn’t an invoice it’s a hobby not a business. So get off of your hobby horse and bill someone!

The lone wolf

I do not know where this crazy idea comes from that founders should do things by themselves like heros or lone wolves. Every great company I know of has had a great group of people at the start. Even if there is one iconic leader you just cannot grow a fantastic business by yourself. At the very least you are going to need other people as customers right?

The stone soup way is to have as many people contribute as much as they are able to the new venture and to pull together a team of believers from the get go. I have also noticed that the more diverse the team the more powerful the enterprise tends to be. Also the more productive people you have the more stature your business and brand tend to enjoy. I also recommend that founders build up a public advisory board as quickly as possible. Often you do not even have to pay them as advisory board members, even famous ones, are often happy to be a part of the success as its own reward especially if you are respectful of their time. In any case a great founder will quickly surround themselves with great people who both believe in the venture and also deliver real productivity every day.

These are three really common mistakes I see time and time again so to counteract these and get to the fun bit faster.

- Keep your day job till you don’t need it.

- Ship it and bill them.

- Teamwork makes the dream work.

And remember founding a business is a bit like making love, if it is not fun you are doing it wrong!