EFP 45: 6 Unexpected Realities For Startup Entrepreneurs
Making the decision to go out on your own and become an entrepreneur can be exhilerating. You’ll be starting something new…something exciting and you start thinking about all the benefits of being your own boss. Sometimes this enthusiasm (if it doesn’t wear off quickly) provides a rosy hue through which you view your future. Everyone’s excited for you, but it’s YOU that has to make this work. Sink or swim…the responsibility is yours, so it makes sense to know some of the downsides that may be coming your way.
The 6 Unexpected Realities Facing Startup Entrepreneurs
In this episode, Joe and I wanted to cover some of the unexpected issues or challenges that come into play when you drop the chains of the J-O-B and start out on your own. Don’t get me wrong…we would trade it for the world…but there are some surprises and challenges you should be aware of. This episode is for you if you’re just about to get started building your online empire or if you’re a relatively new entrepreneur.
Check Out This Week’s Episode Here:
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“Be very clear about responsibilities with new partnerships.” – Joe Click To Tweet!
“You gotta think of personal runway and business startup costs and consider them separately.” – Joe Click To Tweet!
“Making dollars, spending pesos, and putting a ton of money in the bank…” – Justin Click To Tweet!
Topics Discussed This Week Include:
- iTunes May Giveaway! Any iTunes reviews in the US/UK/Australia in May will be entered into a drawing to win a niche site. (Valued at $150-$200) Winner announced in early June!
- We need YOU! Have a site you want to sell? Check out our Premium Broker Package and list your sites on our marketplace!
- Fighting through “The Resistance” and your own civil war
- The lonely road for entrepreneurs and the difference between business/personal runway
- Upside/Downside of partnerships
- Nobody cares more than you
- Start solving problems instead of creating markets
- iTunes Reviews – Leave a review to be entered into the drawing!
- Flippa.com – Largest buy/sell site marketplace. Check out our latest guest post – Unconventional Ideas For Niche Selection.
- Lifestyle Business Podcast on “The Resistance” – Their take on resistance in your business.
Have you run across any challenges as an entrepreneur that were unexpected? Share your thoughts below or on Twitter and we’ll see if we can come up with solutions together!
Speaker 1: Welcome to the Empire Flippers Podcast. Are you sick and tired of gurus who have plenty of ideas but are short on substance? Worried that E-book you bought for 17.95 won’t bring you the personal and financial freedom you long for?
Hey, you’re not alone. Join thousands of others in their pursuit of niche profits without the bullshit. Straight from your hosts, Justin and Joe, from Empire Flippers.
Justin: Welcome to episode 45 of the Empire Flippers Podcast. I’m your host Justin Cooke and I am here with Joe Hot Money Magnotti. What’s going on buddy?
Joe: Hello everybody!
Justin: We’ve got a great episode lined up. We’re going to be talking about six realities for startup entrepreneurs. Are we startup entrepreneurs Joe?
Joe: Well, not anymore.
Justin: Bootstrappy startup entrepreneurs. These are things you’re not going to want to miss. These are some of the learning experiences we’ve had and we’ve seen with others.
Before we do that, let’s cover some news, updates and information. First thing we’ve got is an iTunes giveaway buddy.
Joe: Yeah, hit me up.
Justin: So any reviews we get in the US, UK or Australia throughout the month of May will go into a drawing for a site valued somewhere between 150 and 200 bucks. So it would be earning somewhere between 7.50 and $10 a month. If you give us an iTunes review you will go into the drawing and we will be awarding that at the end of May or actually in early June.
Joe: Our May giveaway.
Justin: May giveaway, that’s right.
Second point, or second thing we want to talk about is we got a great message from Brad. I wanted you to have a listen.
Brad: Hey Justin and Joe. My name’s Brad Evans, and I just wanted to thank you guys for the hard work you’re putting in. And I just want to share a quick story. I purchased a website last month from you guys, and it was estimated to make about $9 a month. And in this month alone, the first month of owning it, delivered $17. So I just wanted to say thanks for over delivering as you do every week on the podcast. So, thanks heaps guys. Talk to you soon.
Justin: That’s so cool man. I’m so glad that he was saying that we over delivered on the purchase.
Joe: Yeah, I’m pumped. You know I mean he got a smaller site and it’s over performing. I think that’s a great thing, and thanks so much for the testimonial.
Justin: Would have left us a message if it went down? Like 9 bucks and then it made 6 bucks. Ah, that would be painful.
Anyway, so our next point man, you are going to Cebu. Monday?
Joe: Yeah. Eric and I are going to meet a possible prospect there. We have a deal on the table, just need to sign on the dotted line, but he wants to meet us first. He’s flying all the way in from Australia so looks like we are expanding our Cebu operation. I’m very hopeful. We’re very close to getting this deal done. I just got to jump on a plane and get it done.
Justin: He’s one of those face to face guys man. Needs to see you, shake your hand, that kind of thing?
Joe: Yeah. You know, old school.
Justin: It’s really cool that we’re running into all of these Australians lately. It’s wild man. The last, I’d say, week and a half, like three different Australians have been here to Davao. We’ve been interviewing, we just actually finished recording an interview with James Schramko that’ll be on next week’s episode. I really thought it was impressive and interesting, so.
Joe: Yeah, and Adam, if you’re listening to the podcast, see you on Monday.
Justin: Anyway, last point we want to talk about is we need more sites to sell. So if you have a site that’s earning, that’s doing quite well and you were looking to offload it, definitely get in contact with us. We’re looking, actively looking for more sites to sell in our marketplace. We’d love to broker that site for you.
Joe: Yeah, we’re always improving the marketplace. And I think we’re going to have a lot better options for vetted sites going forward. We’re going to make it a lot more automatic because it’s been way too manual in the past on me. But yeah, please if you have any site, even if it doesn’t use Adsense, it uses some other monetization method, get in touch with us, let us know, and we can possibly put it on the market for you.
Justin: Look, for bootstrap site builders, I mean, especially guys like us. We’re not really salesy guys, you know. When we started off we didn’t have audience of people looking to buy sites. Using platforms like Flippa.com, using like our broker package, our marketplace to sell your sites, I mean you might as well take advantage of those because they already have the buyers in place. You don’t have to go out and find them. You’ll get your own buyers eventually. But why not take advantage of a marketplace now.
Joe: Yeah, couldn’t agree more. Look, I’m all about not building on other people’s platforms, it’s great to have your own platform. It’s great to be able to build that, but trying to do that from the beginning, it’s costly. And you don’t know if it’s going to work out. So get some money in your pocket quickly by using where the buyers are.
Justin: Anyway man, enough for updates, news, and info. Let’s get right into the heart of this week’s episode.
Speaker 1: This is the Empire Flippers Podcast.
Justin: So Joe, we have six main points that we really want to get into today. The first one being that you are your own worst enemy. And what I mean by that is there’s a thing called an … Our friends over at the lifestyle business podcast talk about it and refer to it as the resistance, right? So there’s this thing inside of you that whether it’s fear of failure or fear of success, that keeps you from actually getting shit done basically.
Speaker 1: Yeah, it’s your own personal civil war going on in your own head.
Justin: Yeah, yeah. And sometimes you realize it. You’re like okay, I just need to fight through that. But it manifests itself in a bunch of different ways, right? So you know we had a friend that moved out of the Philippines and she was looking to get her business off the ground, get it rolling. And she was spending a couple of months trying to figure out where she needs to incorporate, and how is she going to set up her bank accounts and getting her living situation straightened out, when none of that matters to start.
Speaker 1: Yeah, you know, it’s almost a form of procrastination. It’s like the worst form of procrastination though because you are doing work, but that work is not central to your core business. It doesn’t help you make any money and it doesn’t build your business. It’s merely shuffling the paperwork.
Justin: Yeah, but it feels like, you know you can tell your friends, right, that “Oh, I’m starting my business. I’m starting my business.” But you’re really not doing anything and that’s not a good way to be an entrepreneur. It’s not a way to be a real entrepreneur anyway.
Speaker 1: Yeah, I think we see that often as a very common mistake of young entrepreneurs, inexperienced entrepreneurs, is getting caught up in that thing they think absolutely needs to be done before they can get back to business.
Justin: Oh, it happens with I think more experienced entrepreneurs. And people with like real businesses too. So what happens is that things are cruising along, your business is making money, you’re profitable. But you start to get caught up in the minutiae, right? In the administrative action of the business and you say well, I’m getting this work done. But you’re not driving it forward. You’re not building anything new. You’re not starting new revenue streams. You’re just kind of maintaining. And you allow that to take over so it feels like you have a full work day. You know what I mean?
And I have definitely been guilty of this where I start to deal with a little bit here and a little bit there and I go, “Well, I finished a full work day.” But I’m not really progressing or moving forward in my business, you know what I mean?
Speaker 1: Yeah, that’s an interesting angle. I definitely think we see that from other people as well. And that’s probably something hard to avoid but the best way to take care of that would be to hire people to make sure that those paperwork type tasks are taken care of for you.
Justin: Yeah. It’s a lot see cheaper to have someone else do that and allows you the time to move forward. But if you’re doing that, as part of the resistance, you’ll just replace it with new paperwork. So be careful with that. You could just be adding staff for no particular reason, you’re just going to keep adding more and more crap, and now you have a bunch of employee bloat. And that’s not good either.
Second point we want to talk about is entrepreneurial loneliness. Now this is a big one. So when you’re running a company and you have several employees up to dozens of employees, they’re your friends. You’re friendly with the people that work for you, but it’s not peers, right? When you work for a job, when you work at a company, you have peers that you work with and you hang out at the water cooler with, and you tell stories with. And it’s fun, right? It’s interesting to have other people that you hang out with after work.
Speaker 1: Yeah, you got out for a couple of drinks, or you see them at a softball tame on Sunday kind of thing.
Justin: But it’s not the same if you’re the boss.
Speaker 1: Yeah, it really isn’t. And I advise anybody who’s going to start their own business to think about that. I mean if you’re the kind of guy that is a big time team player and loves having these peers around, it can be very lonely at the top.
I mean I’ve suffered from this starting my own business where you get that idea in your head that you’re going to make this big team, you’re going to make all this happen, and you realize that once you’re the boss, once you’re in charge, you’re treated a little bit differently.
Justin: Also, I mean even when you’re first starting out, and you’re hustling right, I mean you’re putting in crazy hours, you’re so focused on it that you go to hang out with your friends that are maybe not as focused on business or entrepreneurial activity and that’s all you want to talk about. And they’re like, “I don’t really…”.
Speaker 1: Yeah, they don’t understand. They don’t get it.
Justin: “I don’t care about your business, alright. That’s interesting, Joe. That’s cool man. Awesome, so how ’bout them 49ers.” You know what I mean?
Joe: Exactly. How ’bout them 49ers?
Justin: Yeah, not doing bad buddy, not doing bad.
So yeah, I mean it’s pretty easy to feel that entrepreneurial loneliness. It’s also even if you’re just starting off, because you’re putting in all those hours, and you’re really knocking it out, it’s difficult to get out there and connect. And you see this tunnel vision. I’ve seen a lot of other entrepreneurs that go, you know I feel like I’m losing some social skills because I’m just locked in a room coding or building out my sites or programming or whatever. You get locked up.
Joe: Yeah, I can absolutely see that happening to anyone who’s really passionate about their project, their business. And that transition from going into an office every day and working closely with five, ten, or maybe as many as 30 people, especially when you start your own business? That’s not going to happen to start off with. You’re going to be at home, in your slippers with your cup of coffee and your laptop all by yourself. Now you could go to a coffee shop but it’s just not the same thing.
Joe: It’s like you used to play basketball and you had this great team around you and now you just go to the gym every day and shoot hoops. You know, by yourself to practice.
Justin: Yeah, that’s one of the really good things about masterminds and being able to connect with other entrepreneurs that are in a similar position. I mean they have their own businesses but you can talk a little bit. There’s some crossover and you can share ideas and interests too, right?
Third point we want to bring up is the upsides and downsides of partnerships. Now if you’re getting a startup going and you’re looking to get funded, right? You’re not using other people’s money, you’re going to have to have a partner. If you don’t have a partner, I mean if you can’t even sell someone else on partnering with you, that’s not a very good sign.
Joe: Yeah, it’s probably not such a hot idea, right?
Justin: Yeah. But if you’re not, if you’re not looking to raise-
Justin: Yeah, seed money or whatever, and you’re starting off on your own, it’s much better to not take on a partner early.
Joe: Yeah, we can do whole episode on this Justin. And I think we have, on our Adsense Flippers Podcast. But you really do have to be very careful when taking these people on in the beginning. You know we always recommend the project partners or the limited partners or whatnot. Yeah, when you’re starting a business though you’re right, it may be impossible to avoid a situation where you kind of have to take on a partner. Just be very careful and very clear about what the responsibilities are, what the division of labor will be, how the money structure’s going to work. All that kind of stuff.
Justin: It’s easier when you’re first starting the partnership. You go, “Oh, well you know we’ll try it out and see if it works.” So what I like to do is a little bit of forward thinking. Imagine in two or three years and it worked amazingly well and your business was just on fire. Is this the person you want to be in business with, right? Do you have similar goals? Are you going to align there?
And then after that two or three years of just being on fire, let’s pretend for a second that your business just crashes and burns. Do you want to be on each other’s team? Is this something you think can work for you?
And if you don’t really know the answers to those questions, you should probably get to know your potential partner a little bit better before you head down the road of partnership.
Joe: Yeah, I think that’s an interesting point, right? You can start working together without being partners.
Joe: So that’s a good way to get your toe in the water, find out more about this person before you start going out there and piling paperwork and oh, he’s a 51% shareholder and I’m only 49%. Why get that involved?
Justin: Don’t get married the next day man. Take her out a few times, right? Couple of dinners, couple of dates, you know. Feel each other out. A much better path to take.
So our fourth point is talking about business runway. Now when you’re going to get started, you’re starting your business, let’s say for example Joe you have 30,000 in the bank, right? And you say okay my expenses for are most part are covered at 3000 a month, so I’ve got 10 months of runway. It’ll get me there, get me started, hopefully I’ll be profitable by then.
Now that’s great, right? But the problem is that you may not have considered design work you’re going to need for the site. Paid traffic you’re going to need to test through. Any programming you’re going to need done. I mean all these things take off of your runway, so your runway of 10 months now becomes five or six months.
Joe: Yeah, I think it’s important to think, not to get too boring or technical accounting here but you’ve got to think of personal runway and business startup costs and consider them separate. You have to think about how much you need to live on and have at least a year in the bank to be able to say, my company’s not going to be profitable for the first year.
Justin: Yeah, a lot of people make that mistake where they go, you know, two or three months I’ll have the money rolling in. I’ll be fine. They quit their jobs. They got a couple of months in the bank and all of sudden they realize, wow, it’s a little more difficult to get business going than I thought. I mean a lot of businesses aren’t profitable their first year, right?
Joe: Right. Good businesses.
Justin: Yeah, good, good, very profitable potential businesses are not profitable the first year. So planning to take a bunch of cash out and be able to support your lifestyle in the first couple of months is typically not very realistic.
You know that’s one of the reasons we have a bunch of friends and other entrepreneurs we know that are traveling or living in southeast Asia where they’re able to extend their runway by moving to a place that locationally they’re able to spend a lot less money on their personal life, their expenses.
Joe: Yeah, I really like that idea. Obviously we’re kind of living that life, so when we first got here, wow, it was so nice living in Davao, because expenses were really low.
Justin: Making dollars, spending pesos and putting a ton of money in the bank.
Joe: Yeah, and I do think that also comes back to the other people’s money idea. And I’ll steal this from Dan Andrews. Man, if you can fund it yourself, do it yourself instead of going out there and looking for seed capital and investment money.
Justin: Yeah, don’t be beholden to your investors or other people telling you how you should run your business. That’s going to cause you way more hassle down the road.
Start off, get profitable, get it to a point your business is starting to explode and it’s bigger than you can make it and then take on investment, right? Then you have people dying to get in there and invest in your business because it is taking off. Don’t start off owing.
Joe: Yeah, and it’s another form of that procrastination that we talked about before. This type of resistance where oh, I have to go out there and search for the money, I’m looking for the money. Oh, I’m trying to work up the capital to get this done.
Yeah, but you could-
Justin: Test the market first, right? Yeah, yeah, yeah. Don’t be out there trying to get all this money. Oh, I’ll do it when I get the money. Yeah, not good. Get your business running and make sure you have your personal and your business money separate. And make sure that you’re going to be able to sustain yourself in the short to midterm.
Our fifth point is that nobody’s going to care more about your business than you.
Joe: I love this one man. I mean this is so true in life. And this is so true with stuff. If you’ve ever loaned something to somebody and said … Somebody asks for a tool or something like that, it comes back not in the same condition that you loaned it to them. It’s so true that nobody is going to care about your stuff, nobody’s going to care about you as much as you do. And so this is true also about your business.
Justin: Yeah, so it’s bit of a cynical look at things but I think it’s true. I mean if you’re not extremely passionate, extremely excited about building your business. And maybe not everything in your business, it’s not required that you’re passionate about everything in the business. But at least growing it and aspects of it. And if you’re not able to share that with the people that work of you. Contractors, they’re not even going to be close to the same level.
So if you’re ho hum about it they’re going to have that feeling or worse. And it’s not really going to work out as well.
When you and I were working in companies in the US, we used to talk about the kind of employees, the give a shit employees, that’s what we called them. Who gives a shit, right, out of the company. And it was generally 10% or so of people that really cared and really want to get it done. And that was kind of a reflection of the senior management. Like us and the other people that work in the company, because we cared. So we were able to help and nurture those people. And the more people in your organization that have that approach or in that position, the better. But they’re not going to have it unless you give a shit yourself.
Joe: And especially when you’re starting out, your first few employees need to be those kind of give a shit employees. Because you don’t want three people in a room and one of them is showing up.
Justin: Yeah, this goes to culture. You need to develop that let’s do this together, let’s work really hard and knock this out culture early on. Especially with your first couple of hires. And I’m sure we’re going to have a lot more to say about first hires in other podcasts and blog posts, but yeah, that’s a really critical piece.
Sixth point we want to talk about is that it’s easier to solve problems than it is to create markets. Now I’m sure you guys have heard this. But you hear someone who goes, “Oh, I’ve got this great idea. I’m going to build the next Facebook and it’s going to include this feature and that feature, and be better than Facebook.”
I mean we have people emailing us all the time that are saying these types of things. And we’re like, so what kind of competitors do you have? “Well none, there’s no one in the space. There’s no one in the space.”
There’s probably a good reason for that.
Joe: Yeah, you know the analogy when we came up with this point that immediately came to my mind is it’s much easier to start a iPhone repair business than it is to start the iPhone business. I mean, if you had to say, “Oh, I want to build this communicator that’s going to be in the palm of your hand. It’s going to be a phone and a computer and be able to browse the web, send and receive email.” And you want to build that thing to start out with, that’s going to take money, time, a lot of stuff that maybe a small entrepreneur doesn’t have.
Justin: And there’s a huge failure percentage on that. A very large failure percentage. And that’s why if you’re … If this is your first rodeo, or you want a first win, I’d say don’t swing for these huge home runs. Take a double. Take a single. Iterate on something that’s already profitable. Just make sure that you differentiate yourself. But work on markets that are already there and improve or solve problems.
Joe: Yeah, and learn some good business strategies. Business tactics out of it that you can use on your million dollar idea.
Justin: Yeah, exactly. I have to say this. I mean I don’t want to … I mean not everyone can just make adjustments to things that are already out there and improve upon them and differentiate and make money. There’s plenty of ways to do it. But if everyone did that nothing new would be created. So it does take those crazy people out there, the ones that go, “I don’t care. I’m going to go bankrupt or I’m going to make this work.”
Joe: Look, I’m not trying to stifle innovation.
Justin: Yeah, yeah, you know what I mean? I want that to happen, it’s just not likely for you.
Joe: Yeah. Especially for the first time. Make your first bet a safe bet. If you’re getting out there the first time I really think that it’s better to do something that’s easier to succeed at.
Justin: And by safe bet we’re just saying target a market that’s already there. We’re not saying don’t take risks, or don’t differentiate. We’re just saying target a market there’s already people out there looking for what it is you’re going to deliver, the service or product.
Speaker 1: The Empire Flippers Podcast.
Justin: So moving right into our tips, tricks and plans for the future. Joe, hit me up Buddy!
Joe: Well I got a good Mac tip for you here. Text Expander. For those of you who like canned responses, it’s a Gmail lab that allows you to have templated emails if you do the same kind of answers all the time. Text Expander’s a little program from Mac that allows you to do dynamic responses. And you can do it anywhere on your computer.
So let’s say you have a canned response that requires a first person’s name and an amount, a price. Well Text Expander will come up in a little window, ask you for the person’s name. Ask you for the amount. And it will take those two variables and insert them into the text. Anywhere. It could be on Skype, it could be an email. It could be in a Word document, whatever it is.
Justin: Are those the only custom fields? Name and price? Or can you do other, anything you want?
Joe: Anything you want.
Justin: Cool man. I think I’ll have to check it out. I’m a fan of canned responses. I like that especially for bulk emails, whatever.
Joe: It also has some really cool typing corrections that take the dictionary to another level. So for me I’m always double capitalizing the start of sentences and I mess it up all the time. This fixes that automatically on the fly, everywhere, again, on your computer.
Justin: You know the worst thing is when you send out an email and you misspell something and it totally changes the meaning. I saw that from you a couple of weeks ago and I was like, “Ah, I know what happened there man.” That sucks.
Joe: Yeah, or you forget not.
Justin: Yeah, yeah, yeah-
Joe: That’s the worst one.
Justin: And you’re like, “Huh? What? What the hell?”
Joe: So another tip. Read your email before sending it.
Justin: Well that’s it for episode 45 of The Empire Flippers Podcast. We thank you for being with us. We’ll be back next week with James Schramko. You can check us out on Twitter at Empire Flippers. And we’ll see you around.
Joe: Bye bye everybody.
Justin: You’ve been listening to The Empire Flippers Podcast with Justin and Joe. Be sure to hit up EmpireFlippers.com for more. That’s EmpireFlippers.com.
Thanks for listening.
How ironic is it that I just reviewed your podcast and you release a contest for reviews lol. Ah well from Canada anyways lol.
That is life.
Another amazing podcast. My personal favourtite tip was about the runway.
You really have to set yourself up for success by providing yourself with some running room.
This has been something that I have been thinking about, but it’s not easy to pull the trigger and let ‘er rip.
Sorry about that, Iain, lol…bad timing! 🙂
It’s all good. Life happens.
I’m just happy there are bad ass shows like yours out there to listen to.
Awesome…thanks, man! New podcast coming out tomorrow unfortunately…trouble with the edit on this latest one. 🙁
No problem…glad you liked them, Mike!
Hi guys !
Experience from my newly found greek candy store : double your expected costs , half your excepted earnings and you are good to go . 🙂
Be healthy and smile !
Some painful truth there, eh? I was just listening to a Foolish Adventure podcast about a guy that buys/sells sites and businesses and they were saying something similar, heh.