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Introduction

Secrets to a Successful Startup is about how to conceive, plan, and launch your own business, one that is resilient enough to survive and thrive in today’s marketplace. I am a serial entrepreneur, and I have built four successful businesses from scratch that have become $100-million entities. I have also written a previous guide, Three Simple Steps, about developing the right mentality to succeed in life. In this book, I focus on how to use that same mental approach to develop winning ideas and turn them into winning companies.

Globally every year, more than 50 million people start new companies, and the majority are single-person ventures like mine have been. Yet the failure rate of startups is shockingly, and unnecessarily, high. For every new startup, another established one fails. Of course, the reasons are varied, but I believe the most important are within your control. My hope is that Secrets to a Successful Startup will be the practical guide you need to help you succeed where so many others struggle and too often fail.

In my opinion, there is never a wrong time to start a company, and it is never too late to reinvent yourself. In 2017, 82 percent of new entrepreneurs were over forty years old, and 18 percent were over sixty. In addition, women owned 40 percent of all companies, up from just 4 percent in 1972. Since 2007, the number of women-owned businesses has surged 58 percent, while total businesses have only increased 12 percent. Further, technology has freed us from being slaves to a building. We can work from anywhere, even while traveling, and we can sell to anywhere and to anyone. In the United States, 69 percent of entrepreneurs start their businesses at home.

On its first day, a new startup can immediately attract a global customer base. There has never been a better or more exciting time to start a company, and achieving financial independence through your company has never been more attainable.

However, I have promised you secrets. Here are the first three. The first and most important ingredient for startup success isn’t a talented team or the perfect product. It’s not tons of cash, an eye-catching website, or a brilliant marketing strategy. It’s you. Your mentality and approach, the way you think, make the crucial difference. If so many companies fail despite all the startup advisors, blogs, and courses, despite all the angel investors and MBAs, then there has to be something wrong with the way the majority of entrepreneurs think. Cultivating the right mindset is vital — both for coming up with a winning idea in the first place and then for building a winning company out of it — and that’s the focus of part 1.

Here is the second secret: No matter what they’re selling, where they are located, how big or small they are, or the state of the economy, the reason that most companies don’t make it and go bankrupt is due to cash-flow problems. Entrepreneurs sometimes doom themselves right from the start because they don’t structure their business, or manage their resources, in sustainable ways. Their expenses outpace income, they hire too many people, or they expand too fast. In part 2, I look at how to structure a business in order to survive the treacherous early days.

And the third secret? Be prepared to adapt. We live in the information age, when technology can change markets overnight. Yet most new startups, and many established companies, still commit all the sins of the bygone industrial age: They are too bloated, inflexible, and unskilled to react quickly enough. They stick to their well-thought-out business plan or to what worked yesterday — trying to sell what they want in the way that they expected — rather than adapting and changing to current market realities. In part 3, I explore marketing, sales, and how to build a trustworthy relationship with customers, along with what constitutes “the success mentality” — the collection of attitudes that startup entrepreneurs need to thrive and meet their customers’ ever-evolving needs. This is the only way to survive long enough to hit a home run.

Leading expert Amar V. Bhidé, author of The Origin and Evolution of New Businesses, examined hundreds of successful ventures, and he concludes: “Coping with ambiguity and surprises is more important than foresight, deal making, or recruiting top-notch teams. Entrepreneurs don’t need unique ideas and venture funding. Rather, they must be able to adapt quickly to changing business conditions.”

Maybe that sounds radical, or more like common sense, but it’s easy to forget and overlook, especially for eager entrepreneurs in the thick of starting their own company. That was me in 2002, when I came across a small book summarizing a Harvard study about why so many small businesses fail. The book highlighted a lot of reasonable advice — like the importance of knowing your industry, being able to identify the competition, doing what you love, and the value of being well capitalized. I devoured every word in the many case studies, but my firsthand experience was about to refute all the conclusions of those Harvard academics. I was about to discover that knowledge of your industry or even of your competition is not important because the day you start your company is the day it changes. I was also about to learn that companies don’t succeed because you are doing what you love or even what you are good at. Yes, being well capitalized is essential, but the amount of money you start with doesn’t make the defining difference, either.

A few weeks after I read the Harvard book, I had the privilege of meeting with George Rathmann, who Forbes magazine once called the “Bill Gates of biotechnology.” Dr. Rathmann was chairman of a company called Ceptyr, and he wanted to hire me as VP of commercial development. I had already had my winning idea, but I was struggling to raise the necessary capital.

Over dinner, and purely out of curiosity, Rathmann asked about my company, and when I started to wax lyrical about my business plan and why its structure would give my startup a better chance of survival, he held up a hand to silence me. He said, “You do not know what business you are in until you get into the business. Just get started and adapt from there.”

It is the best piece of business advice I have ever gotten. Soon after, we agreed to a mutually beneficial arrangement: I worked two days a week for Ceptyr, and for the other three days, I used the same office for free to execute my winning idea. Sadly, George Rathmann passed away in 2012 at the age of eighty-four, but I can hear his voice in my head every time I meet a potential entrepreneur wielding a hundred-page business plan.

The secret to success isn’t in the plan. It’s in the person holding it.