What do entrepreneurs need to know as they get started? Of course there’s need to know, absolutely; and there’s ought to know. I was asked to come up with a list, and here is my best guess.
- Know the difference between cash and profits. You Think in Profits, but You Live on Cash. Things like sales on credit, inventory, and waiting to get paid can make a huge difference. Profits are accounting. It takes cash to pay bills.
- Know that business owners have legal constraints related to dealing with employees, employees vs. contractors, copyright and intellectual property, and dealing with tax authorities and investors. You can’t just say “I don’t know” later on. You are supposed to know.
- Know that getting outside investment is the exception, not the rule. Be familiar with the pros and cons of bootstrapping. Read this: 10 Good Reasons Not to Seek Startup Investors.
- Know that bad behavior and selfishness, which seems to correlate with other people’s success sometimes, doesn’t often work out on the long term. Things like integrity and fairness matter.
- Know that good decisions sometimes have bad outcomes. Not every bad thing that happens is your fault. Bad things will happen. And you have to live with that.
- Know that you will make mistakes. We all make mistakes. You have to live with them. If you can’t deal with mistakes, don’t start a business. You Will Make Mistakes. Deal With It. Mistakes About Mistakes.
- Know how to live with uncertainty. Understanding Uncertainty is Vital to an Entrepreneur.
Note: This post is based on my answer to What should first-time entrepreneurs know that can help them on the road to success, a question posted on Quora.
Also published on Medium.