...And Other Words of Advice From A Successful Entrepreneur
(This is the second of an exclusive two-part series on Atlanta data services company Cloud Sherpas. See Part 1 to find out how the company went from basement hobby to Google app.)
Uncertainty and stress are a part of all startups, which is why an aspiring business owner should actively seek out successful entrepreneurs for advice and support.
Mike Cohn, co-founder and current senior vice president of marketing for Atlanta-based Cloud Sherpas, has three advice points for those thinking of taking the plunge, or who already have.
#1: Burn the Ships
When the Spanish conquistador Hernan Cortes arrived in Mexico in 1519, he burned his ships to motivate his men and eliminate any possibility of retreat. Similarly, according to Cohn, starting a business requires an all-in bet, where the threat of failure is a driving motivation.
In our first year, my partners and I went all in with our life savings, and all of us eventually quit our other jobs entirely. So there was a huge incentive for us to succeed, because failure basically meant not being able to feed our families, said Cohn. It definitely helped keep us focused and drove us forward.
From an investor perspective, burning the ships also demonstrates your commitment to success. It wont guarantee investment dollars by itself, but your determination will make a positive impression on prospective backers.
For the first year of the business, my primary goal was to go out and raise financing, said Cohn. I quickly learned how important it was for investors to know we were all in it as a team.
#2: Go Sell Something!
A business plan means little in the absence of sales and revenue. If you cant demonstrate success, however modest, your presentations and meetings may be perceived as nothing more than business theater.
Investors and customers want to know youre serious about what you do. A solid sales history will beat a presentation long on hypotheticals every time. You have to prove theres a business before you find investors, said Cohn. Explaining our business concept as a hybrid reseller and product provider was fine. But by selling something, we not only proved ourselves to be serious, we proved our business worked. It all starts with sales.
#3: Cash is King
In the early stages of a startup, cash means more than revenue. It means youve got the power to reinvest to generate more revenue.
Cohn believes that reinvesting is key because the business landscape particularly in the IT industry is constantly changing. Staying current on technology and innovation is imperative.
In the case of Cloud Sherpas, which didnt have much physical resource collateral early on, moving cash (including selling receivables to fund future growth) was a necessary daily reality.
It was a tedious process, but it was never all that nerve-wracking because we were fortunate to have clients who paid on time, said Cohn. We were definitely judicious with our growth in the earliest stages, but as our financial pipeline grew, we felt confident about moving more money.