In this article, I share with you the three tell-tale signs of naivety for a first-time entrepreneur who is starting a new business. Exhibit any of these, and your first impressions with seasoned business people might not go as you had intended.
Asking for an NDA
I recently read an article that said that asking for NDA when starting a new business is one of the signs of inexperience. It went something like this: “nobody is going to steal your idea.” An NDA or non-disclosure agreement is valid, and has a place and time, however usually not when and where a first-time entrepreneur thinks it will be required.
Although it’s been a while since I started my first company, I’m pretty sure I pulled out the NDA with every person I spoke with, friends, family, potential vendors, clients … you name it. Now, I only break it out when I’m incorporating it in to a contract or really doing a deep-dive with a vendor.
Why the apparent controversy: no to NDA, yes to NDA? Here’s my layman’s take: as a first-time entrepreneur, the level of information you think is confidential, really isn’t that confidential in the grand scheme of things. There is a place for it, however it’s probably not where you think it is.
You don’t need an NDA to tell someone your thinking about starting a wood fired pizza cafe, for example. The reality is there are hundreds if not thousands of companies like that and an NDA won’t go very far. Once you’re down the road a while, and getting ready to launch your top-secret variation on pizzas and need to source a vendor, then break out the NDA so you can be reasonably assured the materials you’re buying will be unique to your business.
You may feel that your brand new business idea might be a good one, however it might not be one to patent as fast as you had hoped. So don’t be naive…
Having a novel-length business plan
One of the many things I wasted a lot of time on in the early years of starting a new business, was developing a detailed business plan. I remember one of the first templates I used to write business plans was almost 50 pages, and called for everything from marketing and sales support to detailed financial analysis.
I spent dozens of hours drafting elaborate graphs only to find that there was a fundamental problem with the business idea that rendered my detailed plan nearly worthless in it’s then-current form.
So what’s the balance? Strategic planning is critical and the only way to get a business off the ground, so it’s a balance of documenting enough information about the plan so that you can develop your thoughts and share them with others without wasting a ton of time on a particular aspect that may change. The reality is your business “plan” will change a thousand times before it gets off the ground.
Even after you launch your business, you will make changes. Whatever you launch or do first will for sure be the product or service that will not be what your customer wanted. If you have a business plan that relies on that first product/service, then your whole business is more likely to fail. If you build a high-level strategic plan, then you can be flexible and nimble to adapt to market conditions while keeping your business solid.
When you’re planning, map out a strategy timeline where your high-level goals are on the right (your mission & vision), and then work backwards to the left, filling in more and more detail until your business takes shape.
Underestimating the effort of execution
If there’s one thing I’ve learned with growing a business, it is that planning is easy, executing is hard. Don’t be naive and think that the hardest part is building the plan and then getting it running will just fall in to place.
Planning your business is just the tip of the iceberg. It is easy to sit back and say you want to do X,Y, and Z, however you’ll soon come to find out that you’re dealing with a world of other humans who have their own thoughts and ideas and they may come up with a hundred reasons why your plan won’t work exactly as intended.
Summary when starting a new business
Good luck! You have you work cut out for you starting a new business, and it will require plenty of changes along the way. Don’t show your cards on day 1 to an experienced businessman by asking for an NDA, showing a 50 page business plan, and then assuming the execution on that plan will be easy. It won’t.