Imagine a scenario. You work for a large company managing the vendor relationship for a project that your company has outsourced. You are happy with the performance of the vendor. Over the years not only have you learn the business side of things, you have also learnt a lot of things about executing on projects from a vendor perspective. In fact, you have advised the vendor on several things and they almost consider you as their champion within your company.
There comes a day when there is a new project and you are contemplating whether to hand over that project to the same vendor or get a new vendor. Suddenly, it occurs to you that you could structure a deal where YOU could be that vendor. You can resign from your position and start a company and execute this project. You start exploring this idea with your Boss and after a few discussions, he agrees to your proposal and off you become an entrepreneur.
The above seems like a fairy tale but it is a possibility. It also seems like there is “zero risk” in the above proposition. Why? Because the big problem that someone faces when they start a company is to get your first customer. You are covered there. So, unless you mess-up big time, it should be a smooth ride from then onwards.
In reality, many things can go wrong. Here are some of them:
1. Unrealistic expectations: When you start off in a territory that you are VERY familiar (you were an employee there before) everything seems easy. Right out of the gate you are cashflow positive on a monthly basis. This rarely happens in a new venture. The risk here is that you may start “expecting” that things will continue to be easy.
2. Not able to build the sales muscle: What is also interesting is that you have a project that was pre-sold. You didn’t experience “what it takes” to sell a new project with a “new” customer.
3. Risk of complacency: When things go smoother than expected, there is a risk of getting complacent leading to problems further down the road
4. Risk of structural mis-alignment: When you start off executing on a project in a known territory, you also face the risk of building a company structure suited for executing a project. This structure may not be what you need to build a company.
In summary, it is easy to start a company with this setup but hard to maintain and grow. There are always exceptions and you don’t want to base your strategy on succeeding via statistical likelihoods.