Long before Douglas Gan launched VanityTrove, a beauty sampling website for Asian consumers, he started tinkering with a web-hosting company as a side business.
As a high school student, Gan used his spare time to create a fledgling internet business that helped him learn the ropes without the pressure of needing to earn a living. While it was a less serious venture than VanityTrove, which is now in seven countries, his experience working on the web-hosting company meant he had “exposure to successes and failures” early on, the 30-year-old said.
Gan also got an early look at the demands of coding and monetising a website, which paid off once he launched the online beauty site. “I gained a lot of insight into how [web entrepreneurs] think and how they grow their businesses,” he said.
Want to start a company in the next five years? Here’s how to focus your time before the launch:
Five Years to Go
At this stage, developing the skills needed to be an entrepreneur is critical. If you’re employed at a large company, hone your management skills by taking on team projects where you’re required to practice relevant skills on a smaller scale, said Julia Prats, an entrepreneurship professor at IESE Business School in Barcelona. Or, volunteer to lead new work projects to create “ownership” of your corporate role in a way that simulates entrepreneurial thinking and decision-making, she suggested.
Use the next year or so to figure out what type of company you’d like to build by brainstorming ideas. Writing business ideas in “an ‘opportunity diary’, sometimes helps you see things that could be a business opportunity, but you are not yet at the position of attacking it,” Prats said.
At this stage, start saving money to help fund the start-up costs as well as living expenses while you are getting your company off the ground. Many venture capital firms and other start-up investors want to see a product before investing, Prats said.
“The first $20,000 or $100,000 is going to come from your pocket,” she cautioned.
Checklist: Five Years Before
- Focus on leading new work projects
- Start an opportunity diary
- Start a savings plan to cover initial expenses
Four Years to Go
Taking a role at another start-up can be a good way to learn what’s expected of you once you’re on your own, said Jeffrey Paine, founding partner of Golden Gate Ventures, a Singapore-based investment firm that invests in early stage companies. Use your time at the start-up to carefully understand the demands of the entrepreneurial life.
“If possible, work in a start-up in a role that is close to the founders,” he said.
Start building a network in the industry because it can boost business once you’re ready for launch. A strong network can also help would-be entrepreneurs make more genuine connections they can tap later.
Many entrepreneurs make the mistake of not building their network until they have started their business, which can make it difficult to balance with day-to-day demands. As a start, Prats recommends joining entrepreneurship-related clubs or taking advantage of other in-person networking opportunities regardless of whether they are specific to the industry you want to start a business in, because many personnel or start-up issues are applicable to any type of company.
Checklist: Four Years Before
- Joining industry-specific clubs
- Working for an existing start-up
- Meeting other entrepreneurs
Two-to-Three Years to Go
Looking at the big picture early on can help you take smaller steps toward your ultimate goal. Consider “why should this product exist in the world and why must it be you to do it,” said Paine.
Marc “Yeaogho” Kim, 29, spent two years before launching AlarmMon, a gaming alarm clock app with 10 million downloads in seven languages, looking for cofounders. Kim, who is based in Seoul, was a college student at the time and wanted cofounders with real-life experience. He partnered with Michael Hong, a co-founder and advisor to the company with 30 years of experience in marketing and business development who believed in the idea.
Before officially launching Malang Studio — an app development firm that owns AlarmMon — Kim and Hong spent time learning the smartphone market and the services offered by other mobile apps. The co-founders spent more than a year developing prototypes in order to learn what features and services they wanted to keep.
“We tried to learn each time and kept trying new ideas,” said Kim who left his engineering PhD program to focus on the app full time after launching AlarmMon.
Paine tells entrepreneurs to do plenty of research before figuring out how to position their company in the market. It takes about two years before you realise your position in the market, said Paine.
Checklist: Two-to-Three Years Before
- Develop a vision
- Bolster your skills, seek further education and partner with cofounders
- Fill in your skill by pairing with cofounders or more schooling
- Break down your idea into smaller goals
One Year to Go
When working with budding entrepreneurs, Prats suggests they not quit their full-time role until absolutely necessary. In the last year, working on the business on nights and weekends is a common way to make progress.
Rather than taking on extra projects in your day job, it’s possible to use extra time before work to get your new business off the ground. Tasks like creating a website or hiring the first few employees or contractors can be done while you are still working in your nine-to-five role.
Extensive market testing the year before launch helped Jennifer Hill, who in 2014 officially launched Sixty Vocab, a New York-based vocabulary building tool, understand what language learners hoped to achieve when starting a foreign language course. Hill, a cofounder of the company, and her team also spent the year working on prototypes of what the web-based tool would look like when completed. .
Prior to launch, Hill, 38, got her husband on board. She, in part, set expectations for the new demands on her time — for instance, 12 hour days – and his role in doing more of the child care for their toddler. On the other hand, Hill promised to be upfront about any setbacks and to be extra careful about investing money from family savings to help build the prototype. Financials were discussed up front.
“We did some calculations as to how much money we could risk and how long I can go without a salary,” said Hill, who declined to reveal financial figures.
A couple of months before the launch, Prats tells her entrepreneurship students to start working the rigorous hours they expect to when the company launches. Additionally, founders need to get used to doing tasks that were never part of their corporate job description. Anything from arranging travel reservations, to purchasing coffee beans or toilet paper for the office, she said. Those who’ve held corporate jobs in the past may have enjoyed perks like have an assistant or leaving in time for an early dinner, and it can take a few months to adjust to a more humble work atmosphere.
“Start doing those little things early,” she said.
Checklist: One Year Before
- Discuss time and financial demands with family
- Develop an alternate schedule to allow for moonlighting
- Conduct market testing prior to quitting your full-time job
To learn more about starting a successful business, check out the Business Owner’s Playbook.
This article was written by ALINA DIZIK from BBC and was legally licensed through the NewsCred publisher network.