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“Entrepreneurs, as a general rule, are optimists and they’re going to work hard,” Thomas says. “The problem is they’re often almost too optimistic about how fast they can produce and sell their idea.”
Outsourcing positions can be life-saving to companies that don’t have enough cash to pay a full-time employee. Since Thomas created Advanced CFO Solutions 17 years ago to outsource financial services, more than 600 companies have turned to him for assistance. He has served as the temporary CFO for more than 75 businesses including Skullcandy, Ancestry.com, Simply Mac, Modern Display and Lewis Bros. Stages.
“This way they don’t have to hire a CFO until it’s time,” he says. “Startup capital is difficult to come by, so do everything you can do to bootstrap until you have some customers and traction, until you can get some investors.”
Some of the top reasons businesses fail is because of poor management (the owner didn’t seek the correct team members); poor understanding of customers’ needs; and not enough capital because the company didn’t get an accurate cash forecast, didn’t account for all contingencies or just ran out of cash.
Raising money is vital. Work with partners, angel investors, small business loans or just bootstrap as long as necessary—but Thomas suggests that partners avoid taking money from family members, because it often ends up straining relationships.
“Don’t borrow from who we call family, friends and soon-to-be former friends,” Thomas says. “It’s a whole lot harder on the friendship if the [business] isn’t working.”
Remember that even though your innovative idea is bound to be a success, startups are about people and partnerships. Finding a co-founder can be the single largest hurdle for an entrepreneur hoping to launch a business they are passionate about.
It’s usually easy to find someone you are compatible with, someone with your same skills and talents, but in order for your business to succeed, you should look for someone whose abilities bring something to the company that you can’t.
“I’m of the opinion that teams are really good [when] there’s complementary skill sets,” Hanks says. “I’m willing to bet that 99 out of 100 successful teams started out knowing each other and [previously] worked together.”