4 Critical Steps for First-Time Entrepreneurs

“When I was at my lowest point, that’s when the worst people came into my life,” Aiden said.

I was talking to Aiden (not his real name), an entrepreneur who started his company six years ago. He was 32 years old at the time and had market experience and vision.

Aiden started by building a successful one-man consulting practice. Then he started to invest in software development and was spending money faster than it was coming in.

Needing help with the business, he decided to reach out to his college roommate who had his own business serving the same market but with different services.

It turned out the guy didn’t want to work hard, and he didn’t have the business skills necessary to succeed. This cost Aiden money, time, and equity.

Now What?

Aiden needed to raise money to survive and straighten out the mess. He still had skills, consulting revenue, and vision for his company, but he also had a bad partner he needed to buy out. And he needed working capital for the payables and to build a product. It wasn’t looking good.

“That’s when I started to meet these lowlifes. They preyed on me when I was desperate for cash. I had a wife and three kids to support, and they knew it. They promised they could raise the money. All I had to do was give them $5,000 to get started,” he said.

“Gimme $5000”

“It was like my last $5,000. I did this deal with two different people. I found out they were all talk and no action. When I finally figured these guys out, I demanded my money back. One gave me half back when I threatened to expose him. The other told me to screw off.”

Fighting through these tough times, he went back to consulting to raise the money he needed to give him the time to straighten out the mess and support his family.

Three Years Back

He credits the mess to surrounding himself with bad advisors who sounded good but didn’t know what they were doing. He trusted the wrong people and almost lost it all.

It took him almost three years to get back on track. The people he dealt with in the past had his money and he got experience. He used this experience to rebuild and gain acceptance to a credible accelerator program. Then he used their network of quality advisors to refinance his company and relaunch. Good for him.

Beware the Flattery

I asked Aiden, “What could you have done to avoid the lowlifes who almost ruined you?”

“I was too quick to trust people. They would tickle my ears with compliments and tell me how connected and experienced they were. I thought they could help. It is really important for entrepreneurs to do due diligence on these people.

“When I looked into the guys who ripped me off, all it took was a couple of calls to discover their terrible reputations. This was also true of the advisors,” he said.

First-Time Difficulties

Being a first-time entrepreneur is difficult. You expect everything will go well, but it doesn’t. You need help to build a great company. And help seems to be everywhere. So what should you do?

  1. Create a relationship with an attorney who knows the startup community.
  2. Associate with a credible startup program in the community like ATDC, Flash Point, Techstars, and others. You become credible simply by association. These programs are very selective. You may not make the cut when you first apply, but keep hanging out in their space. Keep networking. Meet entrepreneurs who are where you want to go. Ask for their advice and contacts. You’ll learn who is real and who is not real. But be patient.
  3. Partner with an advisor with a great reputation. These people are out there. Your attorney can help you gain introductions if you are new to the startup community.
  4. Start building your business. Paying customers are the greatest credibility builder. You, and you alone, are responsible for raising money. Your advisor and the startup program you are associated with will introduce you to the right people. But it is up to you.

People will either help make you a success or bring you down. You get to choose. It is your life, your dream, your family…and ultimately, your responsibility.

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