The first six months

I started Posse a few years ago as a part-time offshoot of my band management company ‘Scorpio’.  It’s only one and a half years since I raised my first round of capital, and I still make mistakes.  But I learn, too.  Although I still feel like a novice, I’m often invited to speak at business forums, and get contacted a few times each week through LinkedIn or Facebook by aspiring entrepreneurs looking for advice.  I must know something.

My plan is, through this blog, to share the lessons I learn each fortnight.  And I can write with confidence about one stage of founding a business because I know I’ve succeeded.  That step is the first one, the beginning.  I can declare success because we’re still alive!

So, for anyone who’s just starting a business or thinking about it, here are three suggestions to get you through the first six months.

1. Make a plan

When I came up with the idea for Posse, after dreaming about how awesome it was going to be, I drew up a plan.  First, I wrote a document explaining what the idea was, how it worked, and our plans for expansion.  Then I made a very basic financial model on Excel.  Now, I’ve no experience or qualifications in accounting or business planning.  I just created a word document and started writing.  Then I created an Excel document and started making up numbers.

Writing a plan helped me define my idea, why the model worked and my strategy.  An idea becomes much more concrete once on paper.  Building a financial model forced me to structure my plan.  I had to decide on dates that things would happen, the staff I would need to hire, how much they’d cost and how we would make money.

My original business plan and financial model was obsolete within weeks of writing them.  I have a much more sophisticated strategy document and financial model now, but it still becomes outdated every few weeks.  The point is that you need to have a plan.  You need to know how and when things will happen and communicate it with potential investors, partners and employees.  Everyone knows it’ll change, but if you don’t have one you’ll drift aimlessly.  People won’t buy into your vision.

If you think this sounds hard, check out my embarrassingly basic original budget and business plan.

2.  Put yourself out there

As soon as you’ve decided to start the business, or even before, put yourself out there; start talking about it.  Within an hour of coming up with the idea for Posse, I called a friend to talk it through.  The next morning I told two of my band management staff on the way to work, and by midday I’d spoken to several people in the music industry.  I called the head of Warner Music digital and set up a meeting to ask for investment – that afternoon!

I built my first ever PowerPoint presentation the night before my pitch to the Warner Music guys.  They weren’t interested, but within weeks I’d seen all the major touring companies, several managers, and I’d asked a few friends for investment.  I pitched to the Chairman of Ticketmaster and struck a deal before we even had a product!

Each time I met with someone new, the stakes got higher until we had momentum and there was no turning back.  The more I spoke about it the better I got at pitching the idea.  Each night after a presentation, I’d go home and update that PowerPoint.  After about a hundred initial meetings, I developed a pretty good pitch!

The point here is, don’t hold back.  Don’t keep your idea to yourself because you think someone might steal it or (more probably) you’re worried that if you tell too many people then back out, you’ll look silly.  It’s very unlikely anyone you meet is going to drop everything they’re doing to rip off your idea, no matter how amazing you believe it is.  And who cares if you look silly?  I found the process of telling everyone that I was about to start Posse very motivating.  Some people asked me when it would be ready so they could use it, and others told me that it would never work.  I was wasting my time, they said.  I found both of these responses incredibly motivating.

3. Focus

This is where I struggled the most, yet focus is critical for a startup to get off the ground.  In the first six months you attend to three things only: getting the product right, getting the right people on board, and not running out of money.  Everything else is a distraction.

My mistake?  I became so enamoured by the potential of Posse that I started dwelling on the future rather than focussing on the present.  A startup is a process of getting lots of little granular things right one by one.  For me, it was a huge contrast to the music industry where all you needed was a hit song and then strapped on for the ride!

Some of the things I wasted time and money on in the first six months included:

• Hiring an expensive lawyer to set up a complex corporate structure
• Hiring an expensive accountant to build a complex financial model (my spreadsheet would have been fine)
• Applying for patents before the idea was complete and then having to constantly update the application
• Negotiating a deal to white-label the site for a potential client before it was built
• Following up opportunities to launch in other industries before we launched in music
• Inviting important people to be on the board
• Starting UK and US offices before the product was working in Australia!

This list makes me laugh now; it seems so obvious that these were mistakes.  But when you’ve started something, and everyone comes at you with ideas and introductions, it’s very hard not to get distracted!

So, I’ve aired my laundry list of early mistakes.  Next blog I’ll talk about something I did really well in the early days.  That was learning to pitch and raise capital.