As a lawyer, you’re already anticipating my answer. You’re wrong.
If you know me as a business attorney, you might expect that my answer to this question would be “incorporate.” If you know me as a partner in a small business lender, you might expect that my answer would be “raise money” or “capitalize the company.” You likely have your own answers – design a great logo, create a website, invest in great accounting software… the list goes on.
I had a “meet and greet” with a prospective law firm client a couple of weeks ago. The company sells audio fixtures and equipment for music shows and festivals. Their work is apparently top notch, their reputation and brand are growing, and they have more work than the three founders can handle right now.
After telling me all of that great news, one of the founders, somewhat sheepishly, confessed that they hadn’t spent much time getting their legal or financial house in order. He was noticeably ashamed that they hadn’t done anything along these lines – hadn’t formed an entity, hadn’t opened a business bank account, nothing.
It’s refreshing to see founders think this way
The founders looked at me, waiting for me to tell them that we needed to get right on these things. I probably should have followed their cue, piled on just the right amount of additional shame, thrown in a healthy dose of fear that the IRS and a slew of unnamed (but aggressive and formidable, mind you) regulators would be right on their tail, and signed them up as new clients straight off. But I didn’t. I patted them on the back. Not literally, but I had no shortage of praise for them.
It’s refreshing to see founders with their hearts and minds rightly focused – on sales, landing customers, wowing customers. So many entrepreneurs spend far too much time behind closed doors, tweaking pro forma models, sprucing up pitch decks, writing wonderful form customer contracts, etc.
All these things have value, but they are a distant second to getting out and finding a customer. In my book, that’s priority number one – get a customer, make a dollar.
You’ve been trained to think about liability, and I don’t blame you
I can hear you now – “But, Brett, if I don’t form a corporation or limited liability company to house the business, I’m personally liable if something goes wrong.” Yep, you might be. But you are also going to be personally liable for a business failure if you spend all your time focusing on back office stuff and don’t get out there and bring in some income. Besides, a company with no customers and no operations is in very little danger of being sued.
I realize that it doesn’t take long to form an entity, so obviously I am being a tad extreme to make a point. And since I am a business lawyer, I want you to form an entity. Better yet, lawyers like me want to be called upon to form that entity. Those other things I talked about – pitch decks and marketing strategies – are important, too, so go do them. But you better be out there operating, selling, and closing at the same time.
Businesses don’t build themselves. They need customers and income.
The Lean Startup Method gets a lot of attention these days. What I love about it is its focus on action. Do stuff, try stuff. Put products and services out there, sign up customers, gather feedback.
Don’t spend two years behind closed doors making your product perfect, particularly if you’re creating a new product or service that the market hasn’t seen before. Guess what? “Perfect” is perfect in the eye of the beholder. The market may flat out not want what you are building, at least in the form in which you are planning to initially put it out there. So make something and get it out there. Keep some of your powder (money) dry to make changes based on feedback.
What do the most successful brands have in common?
In the business classic, In Search of Excellence, Tom Peters and Robert Waterman, Jr. identified a common attribute of hugely successful companies – they have a bias for action. They try stuff, they tweak it, they learn from it. They aren’t afraid to fail, and a lot of this failure should occur in the marketplace, with real customers.
When I launched a mortgage company in 2001, my first startup where I had the reins, I initially spent too much time behind closed doors when I should have been out selling. I was fresh off a stint with one of the largest corporate law firms in the world. In the world of high-end law, you spend a lot of time making things perfect, dotting i’s and crossing t’s. That’s what our clients wanted us to do and they were willing to pay us well for the work. Everything is overstaffed – at least it used to be. Documents get revised again and again, fixing punctuation, making everything beyond perfect.
That mindset cost my own company dearly
That mindset is in sharp contrast to the “git ‘er done” mindset most companies should have when they launch. I brought that bias-for-perfection mindset into my new venture and it cost my company the strong start it needed. Plus, there was that part of me that didn’t want to get my hands super dirty, wrangle with customers, etc. I wanted to build something pretty and let others do the heavy lifting. I wanted to play puppeteer and direct others from on high. Customer service? Sales? Ugh.
Think you need your website just right to get out there? Afraid to show up without your business cards, which are still at the printer? Think your logo needs a little work and don’t want to launch without it being done? Get over it. No one really cares about your logo. It’s so unlikely to make a difference in whether or not you close your first sale.
“But, Brett, what will I say when they ask for my business card?” How about, “I ran out.” Or, “I’m having more printed.” Don’t feel comfortable with those responses? How about, “Business cards? We’re not using those anymore. We’re getting ahead of the curve. They’ll be extinct within three years.”
Say anything. Or nothing. My point is, don’t use any of these things as excuses for not getting out there and landing customer number one.
I learned my lesson in the mortgage company and, for a while, I had the FICO score to prove it. We burned through our capital quickly and our perfect logo, ideal form independent contract agreement, and meticulously organized company files weren’t recognized as currency by our vendors. Those were some lean times for me.
If you have more money than Google, you may never have to get your hands dirty
But if you don’t have a bottomless coffer, you need to have a sense of urgency about getting out there and bringing in customers (and, if you’re the leader, you better be out there showing your team how it’s done).
We got it turned around after I got off my high horse, felt the fire under my arse, and started hustling to bring in customers and build relationships. Along the way, I happened to learn a thing or two about what our customers wanted. Imagine that: a president who understood what it was like to be on the front lines.
Sure, I learned. But I am hoping that you don’t have to sport a 508 FICO score for a couple of years because you learned the hard way like I did. Tweak your pro forma, spruce up your pitch deck, get the messaging on your website just right, hire an awesome business attorney (hint, hint), but, please, pretty please, get out there yesterday and land a customer. Bring in the first dollar. Yes, you. Get hungry, get dirty. Interact. Try. Learn. Tweak your offering. Sell more. Git ‘er done. Everything else can wait.