April 2, 2008 - Starting your own business

Things they don't tell you in entrepreneurship books

Despite a wealth of entrepreneurship books and courses, there will be challenges you will
face when starting your own business which just don't seem to be covered in any of the
books. These are challenges that I wish I had been prepared for before going into
business.

Don't let the points below discourage you. I'm now involved in my third profitable
company, and I work with a fabulous group of people - so it's clearly worth it.

Raising funds
We hear so much about how hard it is to raise funds for your business, and how the best
source of seed money is your family and friends. This is very true. In my case even after
starting two profitable companies, and selling both of them, I still had to rely on my own
savings and contributions from my friends and family to start my third company, Fidus
Systems. I suppose I'm just really terrible at convincing traditional investors to take risks
on me. I prefer to think that they're just really terrible at knowing who to invest in.

Another shocker: don't automatically assume that your friends and relatives will
necessarily encourage you. I'll never forget a late-night phone call I received from a wellintentioned
relative from California, pleading with me not to leave a perfectly good tech
job and start my own business. After all, I had young kids, and we wouldn't want them to
starve, would we?

I can't guarantee this, but you may find that once you've actually proven that you're a bit
nuts, quit your job, and started your own business, your relatives will suddenly go out of
their way to help you.

It's like a friend of mine who got married while still in university: his relatives were dead
set against it, until he actually went and got married. Almost overnight, his relatives did a
180. They started showering him with money, and talking about how great his new wife
was. I was a bit jealous. But then the same thing happened to me when I got married -
and again when I started my first business. You should consider taking a course in
therapeutic breathing exercises before starting a business (or getting married).

Banking
When I started Fidus Systems with several hundred thousand dollars of my own savings,
my bank (which I had been dealing with for many years) refused to give me a modest
loan to help buy fixed assets. To be fair, they didn't technically refuse the loan. They
basically said, "sure we'll lend you $200,000, but only if you give us $200,000 first, and
we'll go hide your $200,000 somewhere in the depths of our esteemed bank. Once we
have your $200,000, Mike, then we'll have no problem lending you $200,000. Have a
nice day."

After the waves of compassion for my bank subsided, I decided that step one was to find
a bank that actually had an interest in me and my desire to start a business (I switched to
RBC, which has an excellent local technology banking group).

One big lesson for me - just because one bank ignores you, don't give up; another bank
may see the potential of your business. All banks aren't created equal. Some may have
more ethical leaders than others; some may treat their employees better than others. But
more importantly, some understand technology companies better than others. So try and
find a bank that has a group dedicated to technology banking.

Hiring
One of the hardest things I've faced in business revolves around hiring friends to work
with me. It's a natural thing to want to work with your friends. These are people you can
trust, people you care about, people who you want to see succeed financially. It shouldn't
be a bad thing to hire your friends, right?

Well, the reality is that a different relationship can stem from your newly formed
hierarchy of boss and employee. Employees who are friends often drift away because of
this hierarchy, or your relationship naturally progresses to a pure business relationship,
where the only time you spend together is in the office. Think about it: if you've just
spent 10 hours working with this person, do you really want to spend the evening get
whipped by them on a squash court? Personally, I think humans were only designed to
spend up to 10 hours per day one-on-one. Try taking a two week road trip with a relative,
just the two of you, together, 24 hours per day, in a compact car - let me know how it
goes.

A really scary thought: sometimes, it turns out that your friend wasn't the best person for
the job. Or maybe, your company wasn't what they expected it to be. He/she will either
decide to leave, or you will have to let them go. How you handle this will be as varied as
the nature of friendship itself. One suggestion: use every possible gram of strength to
maintain the friendship after you part ways at work. I learned this lesson from a member
of our board of directors. It's extremely difficult to do, but it can allow you to keep a
friend for a lifetime.

Michael Wakim is the founder and CEO of Fidus Systems, an Ottawa-based electronic
product development company. Fidus develops electronic products for a wide range of
industries including aerospace, defence, consumer, medical, industrial, semiconductors
and telecommunications. Learn more about Fidus at www.fidus.com or careers@fidus.com.