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10 tips for first-time entrepreneurs

From overcoming rejections to tackling unexpected circumstances, find out how prepared you are to start a new company.

While a majority of us cherish that dream to start a company that'll change the world, very few of them eventually get to turn it into reality.

If it's your first time, there is a good chance that you'll face rejections, lose a lot of money, make mistakes and perhaps even learn from them.

Now, if you're up for all the above, here are some tips you can consider before you take the plunge...

1. Don't quit your job too soon!

You have an awesome idea you can't wait to implement. While it may be great that you want to give it your all because 'risk toh spiderman ko bhi lena padta hai', taking calculated risks is always wise.

Your day job may end up being your saviour if your idea fails to get validated or your start-up does not take off as you had expected.

Moreover, the money you save off this monthly salary can be wisely used as initial funding for your company.

Don't expect to get angel investment on Day One!

You don't want to end up in a situation where you can no longer pursue your start-up because you have run out of all your savings and need to pay your bills!

So what's a good time to quit your job then?

Well, sometimes you just know. 

You are pretty sure of your idea.

You have got good feedback from your early adopters.

Investors have given you a positive response.

Then you know, it's time to scale and your evening/weekend time does not suffice.

Nishma Shah is a technology enthusiast and start-up mentor plugged into the latest happenings in the Silicon Valley. Follow #Startups for more updates!

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2. Network, connect and meet people

One of the most important but often ignored tip is to socialise; meeting potential customers, early adopters, mentors, other start-up founders, investors and the who's who of your industry is a must.

Often, it may seem like you would rather spend your time building your product, but there are more than one advantages of this:

Gather initial feedback

You end up getting a lot of insights from industry experts which may help you shape your product better.

Don't be scared to share your idea

It helps spread a word about your product early on.

"Stealth mode" start-up may sound cool and you may fear someone copying your idea.

But often sharing your thoughts and ideas has advantages! It helps spread the word about your product within the industry even before you have spent a dime on marketing.

Learn from others

You'll connect to other founders who may have faced similar challenges as you and may actually learn a thing or two from them.

You will be surprised how willing other founders are to help.

Some people you meet may actually end up being your early customers or referring you to some others. If people don't know about your product, how will they know they can use it?

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3. Build the right team and at the right time

Simply put, you may have a great idea but there is no point if you can't execute it well.

Investors give more importance to a team rather than an idea.

Your product will change over time, sometimes end up being completely different from where you started based on market feedback.

But for all that to happen, you need a team to get started.

Find the right co-founder

S/he is the most important person on your team.

Walking out on a co-founder on a business you have spend so much time and sweat on is much harder than walking out of marriage. Or at least as messy.

There is money involved, legal hassles and a career opportunity lost.

Ensure both of you are as passionate and as committed about what you are building. And more importantly, on the same page with the vision for your company.

Hire the right team and at the right time 

Right time? Yes!

Don't hire full-timers too soon!

You have to pay salaries and if you can't withstand that fixed expense, boom!

Hire fewer people than you need, at lease until you have validated your idea, are ready to scale or have some amount of funding.

Until then, outsource, get work done at hackathons, offer internships and best, code yourself!

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4. Validate your idea

Is your idea really as good as you think?

Does it help solve a problem?

You are going to spend the next few years of your life working long hours and without much salary. Do users really want what you are building?

Facebook's philosophy is 'Move fast and break things'.

Don't wait to perfect your product.

Follow iterative and incremental development methodologies like Agile.

Keep it lean.

It may be worthwhile to consider releasing your product with only enough functionality to give users an idea of what your product is all about.

Don't try to fix all the bugs. There is no point of a bug-free product that users don't want.

Collect early feedback. Adapt.

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5. Don't be resistant to change but....

Colgate, founded in 1806 by a soap and candle maker named William Colgate, originally started by selling soap, candles, and starch.

They started selling toothpaste only after 1873 and that too in a jar!

Flickr, founded in 2004, started as a chat room with real-time photo sharing for a web-based multi-player game.

They later shelved the chat room and the game and concentrated on building a platform for uploading and sharing photos.

In March 2005, Flickr was acquired by Yahoo! for $35 million.

There are innumerable examples of companies that started out to do something and ended up doing something else based on market needs.

As you grow and scale, the market will drive how your product will shape up over time.

Mark Zuckerberg would have never imagined how Facebook would be used and what it would become when he wrote the first line of code.

Same with Larry Page and Sergey Brin when they started building Google.

If you are building software, ensure you have enough tracking and measurements built in that will help you gain insights on how the user is using your product, what is working and what isn't.

But... remember to take advice with a pinch of salt

Everyone you meet will have something to say.

While its important to listen to feedback, don't try and implement all the changes they suggest.

Be very clear of what you want your product to be.

Take the right feedback and leave the rest.

'First they ignore you, then they laugh at you, then they fight you, then you win,' said Mahatma Gandhi.

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6. Manage your equity well

Every time you raise money for your start-up, your stocks dilute and your ownership percentage goes down.

It is extremely important to understand the terms and conditions of the termsheets you sign with your investors and how much equity you will be left with over time.

Very recently, it was revealed by TechCrunch and Box's S-1 IPO document that Box CEO Aaron Levie is left with only 5.7 per cent of the company whereas, its investor Draper Fisher Jurvetson owns 25.5 per cent.

Levie sold off much of his start-up to raise a $414 million funding.

Selling off your stock to raise funding is not necessarily a bad decision as long as it's a conscious one.

You don't want to be left feeling cheated.

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7. Evaluate applying to accelerator programmes and incubators

Accelerator programmes are highly selective fixed-term programmes, typically lasting three months.

Here, start-ups are provided with tools, office spaces and mentors that help them build their early product quickly.

They usually culminate into a business pitch made to participating investors or a demo day.

In exchange, start-ups have to shell out some equity, either at the start or end.

Different programmes work differently. Understand them and evaluate if they will work for you.

Some popular ones in India are The Morpheus, Microsoft Accelerator, Venture Nursery, GSF India, iAccelerator, TLabs and the Hatch.

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8. Review your performance

Set your goals and objectives right and measure how you are doing periodically.

Do your own appraisal.

Are you heading where you set out to be?

Take the time out to reflect on your journey. Learn from your mistakes.

Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations: Steve Jobs

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9. Market your product well

You may build a world-class product that people want but what's the point if they don't know about it?

You will have an almost zero marketing budget.

How are you going to spread a word about your product and create a brand?

Here are some tips but there is really a lot more you can do.

Build a website

This is a must!

A good thing to do is to share what early customers have to say about you.

Engage users through social media 

Create pages on Facebook and Google+.

Tweet regularly.

Don't forget to plug-in the Like button on your website

Share your progress

Periodically send mailers updating people in your network about the progress you have made and highlights of any milestones achieved.

Track clicks (you can actually know who read your mailer or clicked on any link). This will help you identify potential customers.

Write

Start a blog. Also, try to connect to popular bloggers who can review your product and write about it.

Use your network 

Help spread the word about other start-ups and ask them to return the favour.

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10. Don't take failure to heart and have fun!

You will have your ups and downs. You will think about quitting every other day.

Building a company is hard. If it were that easy, everyone would be doing it.

Do a favour to yourself, don't quit too soon!

Remember what Steve Jobs said: I'm convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance... Unless you have a lot of passion about this, you're not going to survive. You're going to give it up. So you've got to have an idea, or a problem or a wrong that you want to right that you're passionate about; otherwise, you're not going to have the perseverance to stick it through.

Fear regret and not failure. If you are not making mistakes, you are probably doing something wrong.

Some question you will almost, always be asked are:

Who are your competitors?

How are you different from them?

Why will users prefer you over them?

What is the switching cost for users?

Know this well. Understand the growth strategy of your competitors.

And most importantly, have fun!

If you are not having fun doing this, it's probably not worth it!

In late Steve Jobs' words: Stay hungry, stay foolish!

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