Young people sometimes ask me what does it take to build a business. I’ve been in startups almost all my adult life. Some I built, others I was part of. My collective experience has taught me the following practical truth bombs.
You will always have to maintain someone. If you’re not married, as Asians, you will normally live with your parents. You will need to contribute to the household one way or another. Often, that means contributing part of the bills. There is no escape here. You have bills to pay and you are responsible to someone. So you will need a stipend that covers your daily needs and contributes to the household. Calculate that. Normally, this could be somewhere around $800 to $2700 (or more) depending on the household size, the economic output of the household and your own personal expenses.
When you are young, you don’t and won’t know a lot of things. Either you go through a crash course and learn on the job, or you join companies of different sizes and culture so you have an idea of how things work. My suggestion is 3 companies over a span of 6 to 10 years. 2 in private sector and 1 in public sector. Of the 2 private sector, join a startup or a small SME and the other a MNC or larger SME about 100 headcount or more. The first one allows you to learn through error and experience. The second allows you to learn through mentorship and experience. The benefit in the first one is growing yourself 10x and achieving goals you never thought you could. The benefit in the second one is building a network of trust built over time working with lots of different people, and when you do build your first startup, these people will be your first customers or founders.
There is no such thing as using other people’s money to raise funding and build your startup. When you use other people’s money, strings are always attached. Of all the times I built a $1 capitalised company, approaching investors within the first 12 months is a pain. They will not feel you are taking any risks despite your protestations no matter how convicted you feel you do take an insane amount of risk. Use your own money as much as possible. Ideally SGD150,000. If not, start somewhere. If all you have is SGD10,000, then start with that, but bear in mind there are limitations. You can only do so much with SGD10,000. So you either get creative, or figure out how to stretch that dollar.
There’s only so much you can do alone. Ideally, build a team with like-minded peers who you’ve worked with before and trust. If not, outsource as much as you can any non-essential duties and work and focus on the stuff that makes your business tick.
All 4 things above are stuff you can control. No matter the risks you manage and hedge, running a business is full of unpredictabilities. If you take care of all the risks and monitor your bank account, you will have a smoother journey than others. If not, prepare for painful bumps. Whatever it is, you cannot be afraid of failure.
Now, whether or not you manage your risks, you will hit bumps. You will hit roadblocks. You will get days that shit on you. You will get days when you start to question the point of this thing you built up. This is when you choose between flight or fight. I’ve met many people that chose flight. And many others that chose fight. There is no right or wrong. It all depends on your goals, how you rationalise your actions and your appetite for a fight.
Often, people who chose flight cut their losses and do something else. This almost often means another startup whether founding one or joining one. They experience the least pain, but in my frank opinion, also the least growth. I have often chosen to take flight. I am not a gambling man. I like data. I like stats. I like probabilities. I like logic. I’m conservative. I cut my losses and do something else.
Recently, I’ve chosen fight. Now here’s the thing with fight. You don’t fight to lose. You fight to win. That’s exactly the same goal for people who take flight. They cut their losses and take their winnings. The difference is that for people who fight, they will face a lot of pain. When you go through pain, you will grow. You will find the limits of your strength, and you will break them and get stronger. However, everyone has limits they won’t be able to break. These limits are situational. It by no means describe how weak you are. It only describes how much you stand to lose before you finally throw in the towel and take flight. If you know you are going to lose, stop. If you know you are going to win, continue fighting. The only way to know this is to recognise your opportunity cost.
What is the opportunity cost if you continue to fight?
Will you be able to contribute meaningfully to the household? (Lesson 1)
Will your parents or dependents be able to support or help you tide things over? (Lesson 1)
Will you be able to make salary for your employees and cover overheads like rental and suppliers? (Lesson 2 and 3)
What are the things in your life right now that you might stand to lose if you continue to fight? (car, money, gold, children, family, friends, employees, office, suppliers etc) (Lesson 3 and 4)
Are you willing to lose them even if you win?
In essence, people who choose fight, need to be aware of the cost, and need to be aware that somehow, you will need to pay for these costs. Where do you draw the line? Identify key events that determine your win or your loss.
Then work backwards and build towards the win.
Execute your plan, and check your opportunity costs twice a month especially when your life force is low.
What happens when you win? First you pay for the costs. Second, you celebrate.
What happens when you lose? First you still pay for the costs. Second, you go back to the drawing board and depending on whether you still have the stomach for a fight, try again. If not, it’s ok. Work. Build your money. Build your resources. Build your network. And when the time is right, when you take care of the first 4 lessons, and if you regain the stomach for it, try again.
People fail all the time. But it is also statistically proven that the most long-lasting successful businesses are those founded by people in their late thirties and forties, some even older. So success might come sooner than you think.
If you are familiar with this, then you recognise that the values based answer to the question is grit. Grit is the one value in every entrepreneur that is the most important. But I do not believe that choosing to stop fighting is a lack of grit.
To me, grit is not everything. I want to win. But it is more important to know what battles you can win and what battles you can’t. The only way to know is to actually fight a bit. Winning is as much about being smart as it is about being tough. When you’re throwing those punches remember to keep your gloves up defending them. Live to fight another day. Until you find a battle that means everything to you and when you literally have nothing to lose. That’s when all opportunity costs won’t make any sense. Then and only then, fight till the death.
Fighters build their wins towards a title. What is your title? What is the one thing you’d risk everything for? That, is the answer to everything.