Follow Your Dream – But Know When to “Fail Fast”
Have a plan for when you are going to pull the plug on your idea.
By Kim Lloyd (Co-Founder and CEO, Rock The Deadline)
Since my mid-20s, I knew I wanted to build a company from the ground up. And 20 years later, I have jumped whole-heartedly into my own venture, Rock the Deadline. This didn’t happen without vetting and killing several others ahead of it. The first was a child location tracking service. Using a GPS tracking chip in a sneaker, or a wristwatch, you could use mapping software to keep an eye on your children.
My survey results caused me to second-guess whether or not the timing was right for that type of business. This was way ahead of Google maps and mapping technology for consumers just wasn’t mainstream enough. So while I was very passionate about child safety, I dumped the idea.
My second idea was a combination a flexible office space play. I created a business plan and had plans drawn up. I scouted several locations I thought perfect for this type of business. I invested over $15,000 of my own money for the due diligence process. Ultimately, I decided I didn’t have enough capital and desire to really get it off the ground successfully.
For the most recent idea, a mobile development company, I assembled a team of people to meet several times to discuss what the business would look like. This team represented facets of different aspects to the business I thought would be essential. I killed that one after business plan building, because ultimately I didn’t think I had enough experience in that industry to make it work. I really couldn’t convince myself to start a company completely dependent on others to make my business idea flourish.
As an entrepreneur trying to raise capital, I am privy to a lot of information out there about resources to help startup entrepreneurs. Many are designed to get a lot of ideas to the point of market viability, but we also need to talk about how to recognize a dud.
So before you walk into any entrepreneurial situation, here are some tips:
- Have a plan for when you are going to pull the plug on your idea - How much are you willing to invest in the vetting process? Building out your idea is after vetting. So during this due diligence process have an idea of how much you are willing to invest. Are you willing to walk away from a 10K, 20K, 30K investment?Know how much you are willing to spend to prove whether you have an idea or not. If you are truly an entrepreneur, there’s always another idea around the corner.
- Be prepared to fund the “validation” phase yourself - No matter how “willing” early stage angel investors look, they’re not willing to fund just an idea without any proof points. So plan ahead to what those proof points are and determine how much money it will take to get you there and if you can fund that yourself.
- Don’t fall in love with your idea so much that you ignore signals that it’s not going to work - Competitive landscape, market size, your own personal experience, lack of outside support, etc. The world moves at a fast pace, so always be willing to take into account current market conditions rather than the market conditions that existed when you first had the idea. As much as you can, try to be objective about success criteria.
In summary, it is extremely important for entrepreneurs to have a healthy fear and respect for starting a new business. There are so many great resources trying to help all of us succeed, but is putting a second mortgage on your home, racking up credit card debt, and borrowing from friends and family in ideas that aren’t viable a good thing for the economy?
A danger is that everything these well-intentioned groups are trying to do in the name of boosting the economy could actually hurt it if we don’t make sure we take responsibility and know when to walk away.
Good luck and be prepared to fail fast or kick butt!
Women 2.0 readers: How have you failed fast in your venture(s)? Do you mentor other women? Let us know in the comments.
About the guest blogger: Kim Lloyd is a co-founder and CEO of Rock THe Deadline. She has been building and marketing products in the web and software industry for over 20 years. Her experience includes launching an e-commerce website in 1995 for MapInfo, to her recent role as COO of a top online media property, Bright Hub, and now with Rock The Deadline, a web-based software-as-a-service (SaaS) offering for marketing agencies. Follow her on Twitter at @kimsulloyd.