Five questions my mentees asked me last year
The companies I mentor are a diverse bunch. But their questions aren't. Here are the answers.
I love mentoring entrepreneurs. I remember those days of feeling overwhelmed but excited, passionate but perhaps just a little bit stuck at times. I also remember the number of people willing to help me back in the early days of my first business. Without that help and support Ethique would never have got to where it is today, and I wouldn’t be in the position I am today. So I am very appreciative.
So it is with that in mind I like to give back as much as I can to help people trying to do similar things. I don’t have time to mentor as many people as ask, (which is why I am launching Business but Better), and I do limit it to entrepreneurs who are trying to make the world a better place. But even within that limitation, there is still a breadth of different businesses. From sexual wellness, to biotech, consumer products and even building a personal brand, my mentees are quite a diverse bunch.
But the questions aren’t.
So here are the top five questions my mentees asked me last year:
1. How do I raise money?
Without fail, every mentee has asked me this at some point. It’s a big question, with a big answer and really it depends on a multitude of factors. It depends on the product, the brand behind it, the size of the raise and much more. Next week I am breaking down the ways businesses can source early stage capital so I will save the nuts and bolts for that, but broadly speaking, there are four ways:
1. Friends and family
3. Angel Investors
4. Equity Crowdfunding
Number one is where most people start of course, though I really urge you to approach this from a business perspective rather than relying on relationships and put some contracts in place. To protect you both.
Banks are my least favourite option. They will invariably need collateral to invest in a startup as the risk profile is huge and I never, ever recommend you put things like your house on the line. Banks are not usually a great place to go looking, depending on your financial circumstances.
Angel investors are the most common approach. Cheques can range from $20k all the way to a one million + so there is lots of scope. Angel investors often jump on your board, or offer operational support so depending on what you are looking for they can be very helpful. But beware of fishhooks.
And finally, my favourite, though it does depend on your business, equity crowdfunding. I don’t mean the kickstarter style, rewards focused crowdfunding as I don’t think that serves businesses, or investors particularly well (and I’ll explain why better in the next blog post). I mean selling part of your business. I have done this twice with Ethique and who knows, might just do it again with the next one.
2. How and when do I hire people?
It is oddly common for founders to ask when they should hire a salesperson and every time I say not for years. You as the founder are the single most passionate person about your product. No salesperson will ever be able to replicate the excitement you feel, understand the depth of knowledge you have about it or be as persuasive to your early adopters as you will be. So that one is easy. Less easy is when to add to your founding team. Those initial employees can make or break your business. Don’t hire if you’re desperate but don’t really know what you want them to do.
Do hire if you have great job description and understand what they will need to do. Understand how that will contribute to the business’ success, and why YOU can’t do that (time constraints is perfectly reasonable, as is the fact it’s not in your skill set). Do hire if you are having to turn down sales as you simply can’t keep up with demand (ensure the demand is ongoing, not just a one-off). Do hire if you have a concrete plan to expand whether it be into new markets, or channels and will need the support. And definitely hire if it’s something that absolutely needs doing, and you don’t have that skill set. Outsourcing to a contractor can be helpful as a stop gap measure to see if the help makes a difference, whilst not locking you into a longer term relationship, or messing a potential employee about. But always, always ensure you can afford to pay someone, before you take the plunge.
3. How do I market it with no marketing budget? What is a marketing plan?
One of the biggest challenges for a startup… how do I find more people when I can’t afford to do PR, advertise, or use influencers? Again, the answer depends on the industry, but in almost all situations you can be clever and get your name out there to start generating you at least some cash with next to no spend. Your first port of call is of course social media. What you think is boring probably isn’t. People want to see your journey, they want to understand why you created what you created, they want to know your story. Everyone has something to share on social media and no you don’t have to show your face if you really don’t want to (though I encourage you to).
Don’t underestimate content marketing; blogging, podcasts, anything that makes you the thought leader or expert in your field. A slower to start, but sure way to generate website traffic.
Earned PR without employing a PR company is possible, through outreach and building relationships with journalists – if your product or service has something unusual or memorable about it – this is where purpose-led businesses have a huge leg up too.
Things that may seem stupid like asking your customers for reviews on your google account, on your social media pages, your website – they make a huge difference in convincing people to purchase.
Collaborations are a great way to utilize a larger brands following and whilst it may be hard to convince a big business to help you spread the word, smaller startups may be game.
And finally networking; things like breakfast clubs, networking evenings held by accounting and law firms – they all help too. Though I totally understand the reluctance to network. I’d rather drink a cup of cold sick personally.
4. How do I know if this is worth doing?
Ah yes. At some point all entrepreneurs get to the ‘what am I doing with my life’ stage. Regardless of how passionate you are, running a startup is hard. It’s lonely, exhausting, isolating and friends and family typically just don’t get it. For all it’s pros, somedays you question what you are doing in the mirror. So how do you know if it is worth carrying on?
The number one thing that all successful entrepreneurs share is grit. The grit to hang in there when things are tough beyond measure and it’s hard to see the way ahead. Grit comes through experience, overcoming challenges and developing faith in yourself. But there needs to be an element of realism. When is an idea, simply not a good one? Or when is a product, just not resonating?
First, consider the level of interest in what you are selling. If you have a significant number of potential customers who are willing to pay for what you're offering, it's a good sign that there's a market for your idea. That’s always a good start.
Second, think about your competition. Are you creating a new category (always the biggest, boldest move with the greatest room for growth, but certainly the hardest)? Or are you slotting into a crowded room? Ensure there is actually a gap for what you are selling, or make one.
Thirdly, how good (or bad) are your books? Like it or not, finance plays a huge role in your decision to keep going.
Finally, the most important part of the equation is your passion and commitment to the business. If you're not fully invested in your idea, it's unlikely that you'll be able to see it through the challenges that come with starting a business. If you have doubts, it's better to take a step back and re-evaluate. You are the lifeblood of your startup in the beginning. You need to be committed.
And you know what? If you decide you don’t have it in you to carry on, or you don’t think your product is resonating, the right decision, the brave one, is to stop. It’s not a bad thing to start a business that doesn’t work, it’s not a failure that you didn’t build the next unicorn. Most people don’t even get off the ground.
5. How do I create a business plan?
And finally, how do you write a business plan? I wrote a 34 page business plan for Ethique back when it was called Sorbet and we were less than two years old. What a waste of paper. It was for a competition or I wouldn’t have bothered as after printing it, I never read it again. Business plans don’t need to be novels. I highly recommend you look at my Plan on a Page template here, and ditch the idea that you need a 50 page business plan before you can really start moving. It’s old school business nonsense.
I love mentoring those who are trying to make the world a better place. I hope that by sharing my knowledge and experience, I can help others navigate the challenges of starting and growing a business that changes the world. Next week, I will delve deeper into the topic of raising money and breaking down the ways businesses can source early stage capital. Stay tuned!