4 Things Everyone Should Know When Starting a Business

This piece is to be a very general overview, not an in-depth technical analysis. I hope you enjoy it and find it helpful.

1.) There Are Many Ways to Finance your Company. 

Far to often, people are fixed on the 1 or 2 methods they know or in most cases, think they know. I used to be, unfortunately, in the latter category. I was "drinking the Kool-aid" of venture capital as they say. I learned a painful and essential lesson here but fortunately made it out with considerably more knowledge. 

The lesson: figure out your cash flow needs, and then evaluate all the options to find the cheapest source of capital, end of the story. Ignore the rest and get it.

note: there are many abstract and tangible ways to evaluate the "cost of capital": strategic plays, interest rates, and on and on, etc... 

Here a few common ways I've personally used or seen used:

• Credit Cards - arguably the best option in the beginning and to continually leverage as your company grows (lots of options here, so make sure you match your card with the type of transactions you're using it for)
• Venture Capital - lose significant control of the business, but can accelerate fast growth. Powerful if used effectively, but rarely done. 
• Asset/Invoice Factoring - useful for companies buying assets/inventory to scale and retain equity as they grow.
• Angel Investors - Done through Convertible & SAFE notes mainly, some straight equity deals. A good option for young companies with traction. 
• Private Investors - hard to find, but if you have relationships, you can strike deals with favorable terms.
• Other loans - there are a lot. Do your research to matcha a type of loan with your business. 

All of these have different pros and cons. To find out what is right for your business, find good advisors, and do the Math. 

Leading to my next point….

2.) It's Not Magic; It's Math & Systems

From Marketing to Financing, it's all about the math, and the systems that build the math. Better known as your machine. How efficiently and quickly you can improve this machine will dictate the most critical variable in your long term success: the rate of innovation. 

 You need to be great at modeling and understanding a few straightforward and helpful concepts. Here are some common ones I find beneficial

• Unit economics (by product, channel, in total, monthly, etc.)
• Payback periods (on marketing, on inventory, etc., etc….)
• Projected, Actuals, Variance Models 
• SOPs - A.k.a. "Standard Operating Procedure" one of the biggest switches in the trajectory of Tenzo was when we systemized the entire company. Literally writing out every step. Assigning costs to all steps. Then prioritizing improvements by the steps with the highest costs, the greatest windows of opportunity, and the lowest cost to improve (i.e., the projects "impact score" on the machine).

People Lie, Numbers and Systems Don't. Listen to the truth-tellers

3.) It Takes Longer Than you Think. 

Starting and growing a business takes significant time and effort. In most cases, when it goes well, it's a multi-decade commitment. Besides marriage, this can be one of the most significant decisions you make in your life. I don't want to discourage anyone from starting by saying this. Only help you genuinely understand the responsibility you're undertaking.

Use this frame of reference to make better decisions that your short-sighted opponents. Trust me. Although you won't notice it immediately, it will make all the difference over the decades to come. Slow and Steady. 

Remember, tough times don't last, tough people do.

4.) Health is your #1 Priority

I focus on four pillars that help me stay mentally, emotionally, and physically healthy. When you're just starting and have a small team, your output is one of the essential factors in the success of the business. And as we all know, when you are not mentally, emotionally, or physically healthy, your performance will suffer. 

Notice my word choice, will. Not can, will.

1.) Sleep - sure, you can go one or two nights getting little sleep and still function ok, but it's like a short term high-interest credit card... it catches up on you fast. Try sleeping at least 7 hours every night and probably closer to 8 or 9 if possible. See how that makes you feel during the day and be mindful of your interactions with others. I'd bet you'll see a difference right away. 

2.) Diet - I'm not an expert but try to follow some general rules: avoid highly processed foods, eat lots of fruits/vegetables, avoid bad fats or foods high in sugar. I like the expression, "The closer to nature the better." 

3.) Physical Activity - I like to blend running (3-5 times/wk) with a lot of walking and other activities. 

4.) Meditation - practicing meditation is a cornerstone daily ritual in my life. The effects are widespread and systemic. From helping manage stress to better ideas to more consistent good habits, it's made an enormous difference in both my work and personal life.

I hope you find these points helpful. And I know it's general, we can go into more detail if people are interested. 

I would love to hear what you think about the piece. If you found it useful or have any feedback, please post a comment below! 

Cheers, 

Steve