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Many new entrepreneurs refer to their startups as their “babies,” even treating them accordingly through the sacrifice of time, dedication and financial commitments. Just as parents conjure up archetypes for their children, so too do entrepreneurs for their ventures. And just like new parents, entrepreneurs may have a vision for their freshly minted enterprises and their long-term goals (or adult lives) that may be skewed. She structures a consumer-packaged goods company like a tech startup, expecting VC funding, soaring multiples and a huge exit. Or he starts an enterprise that he envisions living with over the long haul, yet takes early outside investment, losing the future control he yearned to sustain.
If an entrepreneur can construct a realistic vision and supporting plan at inception while staying agile and nimble as the company “grows up,” they can avoid a future mismatch and turn a potential dilemma into an opportunity. Becoming a “unicorn” need not always be the goal. As you, the founder, build the road map for a company that is aligned with your future personal and professional objectives, here are five things to consider:
1. Be pragmatic about the industry dynamics of the product/service you are building
Some industries are built for rapid growth and align more closely with a fail-fast culture. Others are entrenched in long-term reputation and slower market share capture. It may be unrealistic, for example, to launch a brick-and-mortar retail offering and expect hyper growth in the first one to three years.
Related: Vision: The Driver Of Entrepreneurship
2. Understand your target investors
Venture capital is the sexy buzzword among the entrepreneurial community, and VC money can be idealized as the way to grow a healthy business. But the truth is — VCs, as a whole, target high-growth verticals: areas that offer high valuations and extraordinary multiples. And even within those verticals, each VC has its focus; one may specialize in blockchain and another the metaverse. Thus, bringing a clean energy offering to one of those contacts would be completely out of scope. And that’s assuming that VCs are even the right target. For many companies, it may make more sense to target smaller, private investors or even corporate incubators.
3. Determine your long-term involvement interest
A self-aware approach is to ask yourself early on what your long-term involvement interest is. For example, if your dream is to build a company from the ground up, run the company for the long term and eventually hand it over to your children, it may make more sense to keep as much of the ownership private and give away as little equity as possible early on, even if that means a slower growth cycle. The trade-off may be less scale capital, but this will align with your vision for your enterprise. In contrast, if you are seeking to build a hockey stick growth company poised for an exit in five years, you may be willing to give away the equity needed to do so.
Related: Visualization Is Essential for Aspiring Entrepreneurs
4. Articulate what success looks like for your company
As you lay out the plan for your enterprise, it is important to clearly articulate your company growth story. For example, many tech companies prioritize user acquisition in their first years (and longer) and aren’t profitable even after going public. Companies with this model tend to need to raise larger amounts of capital and be able to expand their customer base quickly to support their growth narrative. But maybe that’s not the story you want to tell. Or maybe that’s the story you’ll never be able to tell because your product doesn’t align with hyper growth itself.
5. Define your legacy
Building a company doesn’t have to be 100% about profit. As social, environmental and economic issues come to the forefront, our world clearly needs more enterprises that focus on a purpose beyond just revenue. So, arguably more important than asking “What am I looking to build?” is asking “Why am I looking to build it?” Some of today’s most notable founders have taken intentional actions to create companies that drive sustainability, social impact and philanthropy. Many have registered as benefit corporations, or B corps. For example, some companies have models in which for every core product sold, another is donated, such as TOMS‘ “One for One” and Bixbee‘s (a company I co-founded) “One Here. One There.” These companies were founded with an intention to utilize their success in order to give back. Many others are now following suit.
When founders birth their ventures, it is important that they not do so in a vacuum, with blinders on. The manner in which companies are established, funded and grown can have a lasting impact on their own futures as well as the futures of their creators. It is thus imperative to approach a startup from a multifaceted and self-aware perspective. Doing so will not only better position the enterprises themselves for success, but also more closely align them with the personal and professional visions of their founders.
Related: What It Takes to Grow a Little Company Founded on a Big Vision
This article is from Entrepreneur.com
