You probably have heard and read about some of the success stories about the likes of Henry Ford to Steve Jobs and thought wow this entrepreneur thing sounds great!
Not to put you off the dream, but they are the exception not the rule. Starting a company and making money and the rest of the dream is fantastically difficult to achieve. Again I´m not trying to put you off the dream, but quite simply be realistic about the challenge. Most of the silver bullet entrepreneurs have spent the most part of their life living and learning about business. In the case of 50 Cent he learned about business because of the need and desire to survive and get out of the getto. When Bill Gates was 12 years old he was lucky to go to one of the first schools that had computers and he spent most weekend writing code and getting to grips with the fundamtal platform of computers. A business associate of mine started a company 5 years ago and is doing tremendously well for himself. On the surface you would think he was just increadibly smart and clever to achieve this, but the story is quite different.
Knut is the child of a very successfull norwegian entrepreneur and was tought from a very earlie age about business and how the world of business works. Similar to Gates he has spent thousands of hours practicing to become a clever businessman and he is now doing very well for himself. As mentioned before I do not come from a family of entrepreneurs and was tought to study hard at school so I could get a good job and join the “rat race”. Seeing as I have now spent about 3 years as a fulltime entrepreneur I have so far been practicing for 7500 hours and feel im starting to understand how business works. If I was to start my company tomorrow, my approach would be very different than when I started 2 years ago. However I´m very happy to have learned the hard way and made it throught so far.
About one and half year after starting up in Norway I felt burned out. My head was hurting and my brain not functioning all that well. The fact of the matter is that most entrepreneurs and business ventures fail. Most successfull entrepreneurs have failed many times until they find their special formula for making a business work well. (Please see “Cracking the Code to read more about this topic”)
I meet many entrepreneurs in Norway and you can look at their face wether they are on top of things or are running wild trying to succeed. At the time when I was feeling burned out my aunt looked at me and said “Erlend, you look different. You are still young and you have lots of time to do whatever you want.”She meant I looked stressed and tired. I was both stressed and tired because I was trying to do everything at the same time. With “everything” I mean both personal and business related activities and I quite simply wasn´t able to cope with the pressure so I realised I needed to change something.
No business with friends and family
About 8 months after starting up in Norway I wanted to start a second company. An fashion concious online store to sell trendy “no-branded” accessories to the Norwegian market. One of my best friends at the time also wanted to start his own business and wanted to be part of the company.
Partnership Contract
You will always need to spend a lot of time on drafting a partnership contract. In my first business venture I only had a gentlemans agreement for 10% of the company and we nevers signed a contract or had a partnership agreement formally signed. Needless to say i never got my 10% and I´m glad I didn´t. It was our companies accountant that warned us about partnerships; “99% of partnerships don´t work out. The general rule is that they do not work. Especially not with friends or family.” Partnerships that work really well are the exception, not the rule.
We went in 50/50 with both owning the same type of shares which means it would be impossible for one of us to push forward with something without the other part giving his concent.
The Chances of Success
You have about 1% chance of success with your venture…bla bla bla