How I conquered the 8 biggest fears about starting a business
- Ravin Gandhi is a successful CEO who sold his company to a multibillion-dollar Japanese conglomerate.
- He breaks down the eight fears he says typically stand between entrepreneurs with great business ideas and success.
Before I started my company GMM Nonstick Coatings in 2007, my biggest fear was "What if it fails?"
A wise older friend who had started and sold a number of large companies said, "People on their deathbed usually regret the things they did not do, not their failures. If you don't try, you'll never know if you have it in you."
This was great advice, and changed my attitude in a way that transformed my fear into an advantage.
Ten years later I had built GMM into one of the largest suppliers of nonstick coatings in the world, and we were acquired by a multibillion-dollar conglomerate in one of the largest buyouts in our industry.
Over the years, many prospective CEOs have confided in me about what scares them, and I always find that by looking at these fears in a new light, you can defang them. Below are the most common fears I hear about, and ways to transform them into advantages:
1. Don't fear the competition
It was terrifying to look at the entrenched competition when I started GMM, because a few of the players (like DuPont and their iconic Teflon brand) were multibillion-dollar behemoths with thousands of employees. I used to wander around trade shows with a rolling suitcase, unable to get meetings and despondent. However, I had a 24/7 work ethic with getting sales and was relentless.
One time, I showed up at a prospective client (who would never return a call) without a meeting and talked my way past the receptionist to the stone-faced purchasing manager, who reluctantly took the meeting. By listening hard and solving problems much faster than the existing supplier, a year later that client became our first multimillion-dollar account.
Always find the Achilles heel of your larger competitors (usually in speed or innovation) and exploit it relentlessly to create an edge.
2. Don't fear low margins
A few years later we were on the brink of closing one of the largest clients in the market, with an eight-digit annual spend and sticky recurring revenue. I will never forget the demoralizing horror when the sourcing manager indicated where my pricing had to come in to win the business. I was aghast because we would actually lose money on the account. Nevertheless, I accepted the purchase order because I was confident in pushing my costs down using innovation, supply chain optimization and economies of scale.
After a few years this client became fairly profitable for us, even though GMM's prices are still significantly lower than our rivals. Low margins can be your friend if you have a credible path to increasing them in ways that do not affect your quality.
3. Don't fear paying up for stars
In order to scale, you will need a superstar team, but these types of employees are usually quite pricey. Many entrepreneurs are frightened to invest in sales and technical talent who can bring in large accounts. For the first few years of its existence, GMM barely made any money because of our proactive investments in skilled personnel. I was constantly second-guessing myself and worried about making monthly payroll.
Thankfully, these smart bets paid off and we eventually exploded with profitable growth, in many cases from opportunities brought in from (pricey) top performers. The most expensive mistake is making yourself indispensable to your business through micromanaging, whether you have hundreds of employees like GMM does now, or just a few.
4. Don't fear uncertainty
When you start your business, or anytime thereafter, you will never have enough information to make the critical decisions you need to make. A few times a year, during times of high stress I still wake up in the middle of the night, paralyzed with doubt and only certain of my inadequacies.
One trick I learned when I am worried about a decision is to send myself a "worst-case scenario" email from the party I am stressed about, like "Sorry, you lost the account for XYZ reason," or "We are calling in the loan immediately," or "I quit, and have accepted a job with the competition." I stare at that, and if I am willing to suffer that consequence, I move forward with the calculated risk. By embracing uncertainty, you will become naturally confident because you realize that nobody has all the answers, and decisiveness usually wins.
5. Don't be afraid to pay for high-priced lawyers
Many entrepreneurs never engage qualified attorneys to set up their business, from drafting an operating agreement to reviewing a client or employment contract. This is a potentially fatal mistake, because a bad agreement can destroy your business. Beyond this, litigation is a painful reality for all successful businesses. I was walking through my parking garage late one evening and a shady guy handed me a thick envelope and said "You've been served." Cue week's long insomnia.
By having a smart attorney who pulled no punches, we were able to beat the aggressive competitor who had tried to scare our clients with a frivolous lawsuit. Over time, I have been through a number of high stakes legal cases, and I know the value of having great counsel. Paying a lawyer $700/hour for a few hours is better than spending $1 million on a lawsuit.
6. Don't be afraid to spend on financial reporting
Many start-ups skimp on creating professional financial statements, and this is a tremendous unforced error. If you do not have coherent financials, you will never A) get a loan; B) pass a client credit check; or C) truly understand the financial levers of your enterprise.
One of the first key hires I made at GMM was our CFO. Years later, when I was negotiating with SDK, the multi-billion-dollar Japanese conglomerate that wanted to acquire GMM, it was a grueling six-month long intensive due diligence. If we did not have that professional CFO and rock solid financial reporting, this buyout deal would have never closed.
Bad numbers are the top deal breaker in M&A, so get it right from the outset.
7. Never be afraid to think big
Besides being an entrepreneur, I have invested in many early stage start-ups, some of which have gone on to raise hundreds of millions of dollars in funding. One of the clearest indicators that a startup CEO is a superstar is that he or she is not afraid to think very, very big. When I became the first investor in KeyMe in 2012, the CEO (who was still a graduate student at Columbia University operating out of an empty classroom) shocked me by saying he foresaw building a billion-dollar business.
Of course nobody knows what the future holds, but the only people who are going to hit a home run are people who aren't afraid to go up to the plate and take a big swing. Our brains are naturally wired to hook onto compelling stories, and tales of exponential growth and industry transforming outcomes are riveting.
8. Do not be afraid of optimism
The world is a tough place, and most people will fail at starting a successful business. However, do not let that stop you from being an optimist. Sometimes in very important sales or pitch meetings, even when I feel anxious or pessimistic, I will have an "out of body" experience and I can see myself speaking passionately and positively, and I think "I can't believe this guy (me) is saying all this crazy optimistic stuff!"
Yet people seem to listen, because optimism is gasoline for leadership — without it, you are going absolutely nowhere. Do not be afraid to believe that things will work out, because if you work your tail off your chances of success skyrocket.
—By Ravin Gandhi, founder and CEO of GMM Nonstick Coatings, one of the largest suppliers of nonstick coatings to the $9 billion housewares industry. As a VC investor, Gandhi has stakes in KeyMe, Hester Biosciences, Ka-Pop Snacks, SenSanna, Apptronik, Amber Agriculture, Ampsy, Tred, and Lettrs.
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