The "Ten Commandments" for the Beginning EntrepreneurLessons Learned from a Decade of Accompanying Israeli Entrepreneurs By Prof. Liora Katzenstein, President, ISEMI - Entrepreneurship in Israel
1. Raise Capital When You Don't Need It
A typical entrepreneur is always in a constant race in search of financing sources. The right time to look for new finance is at the beginning of each step, while there are still some cash reserves. Otherwise, he may find himself in a constant chase of cash flow and interim finance, which will prevent him from performing his role as an entrepreneur within his organization.
2. Focus on a Well-Defined Limited Business Field/Niche
Entrepreneurs often make the mistake of trying to cover too many subjects at the same time. Many of the entrepreneurial companies try too often to develop a relatively large number of new products simultaneously, or as a variation of the above, try to develop new products, and at the same time, do sub-contracting or consulting work. This is a sure-fire recipe for failure.
3. Listen to Expert Advice and Don't Hesitate to Pay for Professional Services
Entrepreneurs tend to think they "know it all". They think that since they possess a wide technical knowledge, all other complementary areas, such as marketing, financing and organization are "child's play" that they can offhandedly master. Furthermore, entrepreneurs tend to think that they know better than specialists and thus refuse to allocate funds for professional advice. These "savings" eventually end up costing the company large sums of money, and sometimes, its very existence.
4. Choose a Team of Professionals and Don't Compromise on the Quality of Manpower
In any organization, and especially in those that are high tech based, the most valued assets are its human resources. The entrepreneur should therefore, from the start, select a professional team that would complement him and shouldn't compromise on the quality of the people around him. The task of locating key personnel in Israel is easier, due to its smaller size.
5. Don't "Argue" with the Market
Many entrepreneurs think they know better what are the market's demands, because they think that "there is no way the market wouldn't want my invention". Such reasoning, which stems from a technology-driven attitude, is quickly proven wrong, the result being money and efforts spent in vain.
6. Develop a Strategic Business Vision as Early as Possible and Learn from Your Own Mistakes
Developing such a vision would enable the entrepreneur to have an overall view of the political, business and economical impacts of the environment on his business, and will enable him to plan ahead in a way that would minimize his chances of a loss. The other part of this vision is a candid (and sometimes very painful) examination of past mistakes and drawing the applicable conclusions.
7. Enlist the Support of Your Family and Friends
An entrepreneur tends to work long hours, to see very little of his family, and at certain times, to fail to bring sufficient income for his family. Field studies have shown that entrepreneurs who fail to receive the full support of their families and close friends tend to "break" at critical times and abandon their entrepreneurial activities.
8. Define Correctly the Comparative Advantage of Your Product from the User's Standpoint
The typical Israeli entrepreneur tends to believe that he represents the familiar combination of "better and cheaper". In most cases, this is insufficient to draw the attention of the potential buyer. The right way to approach the potential buyer would be to point out the benefits and advantages of the product or service from the buyer's point of view.
9. Stay in Touch and Learn from Other Entrepreneurs - Network
"It's lonely at the top" is a saying often associated with entrepreneurship, which is an activity encompassing loneliness and individual struggle. It is, therefore, important to develop a support network of entrepreneurs that have already experienced different entrepreneurial stages and have been exposed to successes and failures in order to enlist their support in the difficult moments that each entrepreneur faces.
10. Learn About the "Life Cycles" of the Entrepreneur and the Business
There is one embedded conflict in entrepreneurship. The turning point, in which the entrepreneurship succeeds, the business develops, sells on a large scale, and its various departments institutionalize, is exactly the point at which the entrepreneur should leave the business and concentrate on what he's really good at - starting other new businesses. Most entrepreneurs find it hard to make the transition and they tend to remain in the business they've started and "rest on their laurels". In theory, as well as in reality, only very few entrepreneurs succeed in becoming good managers. The rest finally fail the companies they have invested so much effort in building up.