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So, you’re a first-time entrepreneur. Congratulations! You’ve made the leap into a new, excitingly unpredictable world. And now the fun begins.
If you haven’t already, you’ll soon learn that there are going to be countless hard-to-navigate situations, many of which will immerse you in new levels of awkwardness. In your new role as a business leader, you’ll be forced to deal with questions, issues and conflict from a completely different angle.
While you can never be completely prepared for these strange new predicaments, you can be forewarned.
Here are five awkward situations you’ll have to overcome as a first-time entrepreneur:
1. Being completely clueless
You’re not going to have all the answers as the head of a new company.
You’re not going to have all the answers as the head of a new company. Not only will you have to take on unfamiliar responsibilities, but you’ll also have to make quick decisions with little time and information to go on.You might feel like a deer in the headlights when everyone turns to you for an answer you don’t have, but remember, just because you’re not an expert in everything doesn’t meant there aren’t knowledgeable people around you.
As you build your team, find talent and advisors you feel comfortable turning to for advice. This means not only trusting in their expertise, but also in their values, dedication and judgment. You should always be the last one to sign off on important calls, but rely on your team and their experience to make the most informed decision possible.
Be comfortable with the idea that you don’t know everything. At the same time, be confident you’ll be able to figure it out. Being an entrepreneur means being a problem-solver. If your advisors and team don’t quite get you to an answer, trust the gut that got you this far and go for it. You won’t always be right, but at the least you’ll learn something you can apply for the next round of questions.
Image: Flickr, Hartwig HKD
2. Admitting you’re wrong
So, you’re going to make mistakes. I know I’ve made plenty in our journey thus far. As the company leader, those missteps can affect everyone else’s hard work and create awkward situations no first-time entrepreneur wants to be in. Projects might have to be redone, timelines revisited, investors might back out, sales may be lost and product design might have to go back to the drawing board — all because of a decision you made.
When you realize you were wrong, own it. Don’t belittle the mistake, or blame someone else. Like Andy Dunn says, “it’s all your fault” and there’s no escaping that, so don’t even try. Next, focus on what you learned and how it can be applied to the future. And then move on as quickly as possible with positivity and enthusiasm. Things have to keep moving at a startup, so there’s little time to dwell on mistakes, and your team will need to see you bounce back like Rocky.
3. Constantly having to raise money
One of the biggest issues new companies face is cash flow. A 2014 survey by CB Insights found that 29% of startups failed because they ran out of money, and in the current environment this number will likely increase significantly in the near future. In order to keep your new business growing rapidly, you’ll have to raise capital. Then do it again. And again. (All of this assuming you’re not the real unicorn that has figured out rapid growth via bootstrapping. In that case, skip to #4!)
When my company started its first round of fundraising, I had to get comfortable quickly with asking for investment. And while we just closed a Series B fundraising round that takes our total capital raised in the history of the business to just under $20 million, it was not easy in the beginning. I pitched the wrong folks the wrong pitch at the wrong time, and that was with help from experienced VCs and entrepreneur friends helping me along the way. Raising money is hard, and it’s especially hard in the early days when even you’re not quite sure what you have.
This is especially challenging if you’re not naturally a salesperson. It can make you feel like you’re coming off as desperate, which in all honesty, you probably will be at some point. But you can overcome that feeling.
The first trick is knowing your audience.
The first trick is knowing your audience. Think about what will grab their attention and focus them on the conversation. They’re hearing pitches all day, every day and you need to stand out. Then nail down your pitch so that you can deliver it with unassailable confidence. Know your business inside and out. This includes your proof points and the numbers that back up your company’s value.Keep your deck simple — no more than 10 slides and as few words as possible: Problem, solution, market size, team, ask and an appendix with a financial forecast. That’s it.
And finally practice, practice, practice. And that doesn’t just mean running your pitch by your mom. Find an independent person — a trusted advisor, a venture capitalist that isn’t a fit for some reason, or a fellow founder friend — and ask for their feedback about what is appealing and what is falling flat.
4. Disagreements with investors
Once you get the money in the bank, it can lead to another sticky situation: deciding how to use it. And chances are, your investors aren’t always going to agree with you. The 2015 State of the Startup report from Sage found that 36% of investors have relatively low trust in their entrepreneurs’ financial capabilities.
When disagreements with investors do arise, you’ll need to hear them out. After all, they were the ones that gave you the money, and if they’re on the board or are a trusted and experienced voice, you’ll likely learn a lot. But that doesn’t mean they’ll always be right.
You’ll have to learn to pick your battles.
You’ll have to learn to pick your battles. Should they start talking about taking the company in a direction you don’t believe in, or suggesting changes that aren’t aligned with the core mission, or that go against the core analytical understanding of the biz, it’s time to stand your ground.It’s easy for entrepreneurs to get emotional when it comes to conflicts about the company that’s become their life. But try to approach disagreements with investors as rationally as possible. Respect their input, first and foremost. Like you, they only want what’s best for the business (and their dollars invested in it), and they may have insights driven by years of experience or pattern recognition across portfolio companies that can help inform the strategy.
Finally, when debating a given decision, speak their language by using data and analytics to bolster your argument. You’ll be more likely to get them to see things from your perspective when it comes to important financial calls if you follow these simple rules.
5. Letting someone go
Being a first-time entrepreneur means that you are now responsible and in control of your team’s employment. When an employee doesn’t work out or the budget dictates cuts, it’s up to you to make that hard call. And with a small team and the inherent closeness that creates, letting someone go can be incredibly difficult.
Above all else, the company must come first. So if someone on the team is impeding success due to poor performance, misalignment with core values, or holding a less necessary position, you’ll be the one charged with making the tough decision and delivering the news.
In that moment, remember that every member of the team joined for one reason: to keep the company and its vision alive and thriving. Honor that, but also be as honest and sincere as possible when having the awkward “we’re letting you go” conversation.
Provide context, and always keep in mind that this is a human being with a life, and that they deserve your consideration, respect, and to be heard. But also keep it relatively short and to the point to minimize pain for everybody. It’s unlikely that this task will ever become easy, but knowing it’s the best decision for the company — and often for the individual impacted — will help keep everyone involved on the right track.
If being an entrepreneur were easy, everybody would do it — and everybody would succeed. But as we all know, that’s just not the case. Running a startup is going to drag you into a lot of uncomfortable situations you’d rather avoid. If you want your company to make it in the long-run, be ready to get out of your comfort zone. You’ll come out of it on the other side a better manager, a better leader, and with a stronger company.
What other awkward situations will a first-time entrepreneur have to face and how can they overcome it? Share in the comments below!