5 Killer Tips for Beginner Entrepreneurs

It’s been almost two years since I sold the shares of my first start-up venture. It is time to share some pieces of advice after that valuable and enriching period of my life.

Starting a new venture with three partners was one of the most enriching experiences of my life. Everything began in 2015 when I had my first thoughts on how to change the business model of the traditional real estate agencies in Spain to solve customer pains that no other company was trying to solve. In March 2017, partnering with an MBA classmate who had a similar idea, we launched one of the first digital real estate agencies born in Spain. In early 2018, a year before moving to the USA, I exited the company with some valuable lessons that I will take in to account for my next ventures. Here are the top takeaways of this great experience.

Improve the value proposition design method. Go deeper into the human aspects

Most of the time, we think that entrepreneurship is about launching to the market new business ideas that hopefully will bring growth to the customers, employees, shareholders, and society. I agree as a consequence, but not as a root purpose.

Entrepreneurship is about to bring progress to humans through products and services that help us to improve how we perform our life Jobs-To-Be-Done.

Reminding when we started to develop our service based on the conception that the Spanish market needed a more efficient, convenient, and affordable approach for sellers and buyers to transact properties, we were right in the idea that there was a non-consumption real estate market eager to have that service. Obviously, we did not know it when we started. But we know now because this company currently has five digital competitors selling successfully real estate nationwide with the same business model, and growing. However, having done what I think is a good job analyzing the market, we had not enough insights from the customer side (the buyer and the seller of the property) to develop an excellent value proposition based on an in-depth knowledge of their profound human aspects when performing the experience of buying and selling houses.

There is no time wasted interviewing people. Centering your interviews in empathizing with them, you almost always will have new inputs and knowledge on how the product you are designing could address their pains, improve the way they perform their Jobs-To-Be-Done while creating gains.

“If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from his angle as well as your own. ” — Henry Ford

Vector created by pikisuperstar — www.freepik.com

To improve the design of your product or service in the MVP stage, I would highly recommend utilizing one of these methodologies, or a combination of them:

Envision the industry in the long-term

In our case, we shall ask ourselves more questions to envision and plan for the future of the industry. We were developing a low-end and new-market disruptive innovation to aim people to have more convenient and affordable real estate services. But we did not think that lots of competitors would arrive very soon to the market, all of them low-cost and very challenging to differentiate from.

Vector created by pikisuperstar — www.freepik.com

Some questions to ask yourself and your partners that could help to envision and better prepare for the future of the industry are:

  • How could the next generations of customers change your industry in the future?

  • What technology advancements are coming in the next years, and how could these technologies impact your industry? How could this affect the forces of the industry?

  • Where will the profit be in your industry in the next years? Is your venture designed to follow the profits of your industry?

  • How do you think your competitors will react when you enter the market? Will they compete for your market or flee out of your market? How?

  • Can your competitors quickly develop your innovation with their actual business model, or do they have to create a new one?

  • Could your innovation be easily copied by new entrants (low barriers of entry industry)?

  • If you expect competitors copying you, how do you plan to have and sustain advantage in any of your business model layers?

The partner’s agreement is mandatory to set future expectations and actions

Human realities change along with time. Startups too, lightspeed. As those realities change, one wants to have a handbook for managing these situations and protecting the interests of every partner and founder. That handbook is the partner’s agreement.

Vector created by upklyak — www.freepik.com

To develop a partners’ agreement, imagine all the founder team in the company’s future best and worst scenarios, and ask yourselves “what if…” questions that can cause conflict. Here are some examples to help you start thinking:

  • What would happen if you or your partners meet an investor that wants to buy his/her shares? And if his/her part of shares allows the control of the company? What if you don’t want to sell? What if you’re going to sell, but the investor only wants the shares of your partner?

  • What if a partner needs more money (wages) to survive in the future?

  • Are you going to limit the wages to have more profits to invest in the first years of the company? What would be the KPI for wage increases decisions? To whom?

  • What if a partner wants dividends, and others prefer to reinvest the profits to grow faster?

  • What if a partner finds another job and wants to leave the company? To whom can he/she sell the shares?

  • How is the decision-making process going to be on the board of directors (the unanimous, majority of votes)?

  • What if we have the opportunity to hire valuable talent, but they want shares of the company? Which types of stocks would we offer?

On top of that, I would recommend understanding what the tag-along and drag-along rights are. You can add these rights to the partners’ agreement to protect minority and majority shareholders.

Gather an essential and unique team of partners: the Minimum Viable Team

Probably you tell your idea to people you trust, and then maybe they ask you to join the venture, or you ask them. But before making any verbal agreement, ask yourself this question: are the founder or partner candidates bringing new, unique, and highly valuable skills for the first phase of the project? It is critical to put together an MVT (Minimum Viable Team)to start and found the company, but nobody more.

Vector created by pikisuperstar — www.freepik.com

If we are not sure what added value and unique skills a founder partner candidate brings to the venture, it will be better to not count on him/her as a founder partner.

Having more partners than the MVT with duplicated skills in the initial phase of the start-up could overlay tasks, or give you a hard time to find what other unique functions your partners can do. On top of that, in the first phases of the start-up, cash resources could be limited, and you don’t want shareholders on board consuming more resources than necessary. That is precisely the reason for VC and Business Angels to be reluctant to invest in your venture: if they see that the founder team is more than the MVT, that could be a deal-breaker. They would consider those unnecessary team members a resource wasting and a future threat to improve returns because they hold shares (and maybe a lot of them). We should take into account that these investors are giving you their money to have as high returns as possible, so they expect only to found the essential resources to drive the venture to success.

A true MVT team of founders will include most if not all of these conditions:

  • All of you have a common purpose and vision for the venture.

  • All of you have easy-to-differentiate skills.

  • All of you could perform proficiently different tasks that no other founder will do or can do.

  • All of you have different personalities. Diversity with the openness to learn and improve things will boost your odds of success.

  • All of you have a personal commitment with the time and other individual resources dedicated to the new venture, reflected transparently in the partner’s agreement.

Expect more tension and intensity of what you have in mind

Even if you are partnering with the best of your friends, be prepared for tension, stress, anxiety for results, decision-making discussions, and a bunch of human emotions that may make the venture and personal relationships challenging. However, giving the best of us as human beings, understanding the other’s point of view, looking together for solutions, acting as a good leadership example, all the conflicts will be addressable, and the venture will worth it.

Being an entrepreneur could be exhausting, but it is an experience that I would highly recommend to any curious and learning-oriented mind. The odds to succeed are very low, but these mindsets will be the ones who change the world as we know today.

Be purpose-driven, start, create new opportunities, and build human progress.

My purpose is to help people with my thoughts while learningwith your feedback. If this post has been useful for you, please share the story with people that could benefit from it 💙.