Editor’s note: This article was first published in July 2014. Altucher’s figures, including 17 of 20 companies failed, advice to over 50 private companies and more than five bestsellers, are as stated in 2014.
This man admits that he fails often. Out of 20 companies he started, 17 didn’t work.
He defines entrepreneurship as a series of failures occasionally interrupted by successes. He has advised more than 50 private companies and sits on the boards of several. And as if that weren’t enough, he has more than five bestsellers to his name.
Of course, we’re talking about my dear friend James Altucher, who says he has learned as much from his few successes as from his many failures. This time we’ve summarized his rules for being a great entrepreneur. As you’ll see, they carry the Altucher stamp.
1. Owning your own company is not fun. He won’t explain the many reasons why it isn’t fun, because these are rules, not theories, so there’s nothing to prove. Still, if you want an idea of why it isn’t as much fun as some people make it sound, we explain it in detail in this article: The hidden price of starting your own business. You’ll hate a large part of the process of being an entrepreneur, especially at the beginning, so Altucher advises you to stay away from sharp objects during the worst moments.
2. Try not to hire people. You’ll have to hire employees to grow your business, but it’s good discipline to question whether you really need each hire you’re considering.
3. Get a customer. It sounds obvious, but it isn’t. Get a customer before you start your business, if you can. There’s a huge gap between a business idea and being able to win customers. How hard it is to find that first customer before you open will tell you a lot about your future business. Validate your business idea with a napkin and a pen in five minutes.
4. If your company offers a service, call it a product.
Oracle did it. They said they had a database, and then they would send a team of consultants to help you install it and meet your needs. In their first years they claimed they were selling a product, but in reality they were a consulting firm. Never forget this: “products are valued much more highly than services,” so make sure you use the right marketing to sell a product, not a service.
5. It’s fine to fail, and all that about starting again with lessons learned, but try to fail before you run out of money, and hopefully before you have investors’ money. But if it happens, don’t worry more than you need to, and start again with new ideas.
6. Be profitable. Try to be profitable right away. It seems obvious, but it isn’t. How much a business needs to grow each year to be profitable.
7. Competition is good. It turns you into a cold-blooded killer and helps open your mind to new paths. And never forget that your competitors are also potential buyers of your company.
8. Communicate with everyone. Employees, customers, investors, suppliers. Communicate with them all the time, every day or every week.
Employees want to know what to do and how to help. Customers want to know how to keep their bosses calm, suppliers want to know how you’re doing, and investors want to be your friends and get first-hand information about your company.
9. Do everything for your customers.
Maybe this kind of customer policy doesn’t really exist in Spain. I’d even go so far as to say the opposite policy exists: keeping your distance from customers on a personal level. That’s why it was so easy for me to take customers away from the competition. Help them grow. If your customer grows, your company grows. Forget the “hooker and john” relationship, where the only bond is money. Go to your customer’s daughter’s wedding if they ask you to. Call them just to see how they’re doing, and forget the impersonal Christmas cards. If you’re going to send me a generic greeting card, you know where you can stick it…
10. The customer is not a company. Behind a company’s name, they say, there is usually a human being. What will make that person happy? Help them get that happiness. They won’t forget it.
11. Let your customers get to know you as a person. There’s nothing wrong with having breakfast or lunch with a customer, and not necessarily during working hours.
12. Learn your customers’ stories. Behind every businessperson who runs a company, large or small, there’s a success story, large or small. Maybe they had hundreds of problems when they started; maybe they have a genuine story of motivation and overcoming obstacles. Behind every businessperson there are more than 100 lessons in entrepreneurship. Some are repeated, but others are original, and we need them.
13. Know your product. Nobody should know your product better than you. If you’re not technical, at least learn all the specific technical details, to the point where you can manage the technical people.
14. Get the sleep you need. Don’t fall for myths like the one that says an entrepreneur works 20 hours a day. We know there are many successful people who only need three or four hours of sleep, but that gift is genetic. If you need eight hours of sleep, make sure you get those eight hours, or you won’t be productive. If you work 20 hours a day, it’s because you’re not working well or you’re in the wrong job.
15. Exercise. As with the previous point, exercise is not optional but an obligation if you’re an entrepreneur. Otherwise your health will make you pay for it. Don’t think of exercise time as wasted time. Think of it as time well invested, because it will pay you excellent dividends.
16. Make your employees happy. Do nice things for your employees, whether it’s vouchers for a massage or tickets to a play… Altucher says he made sure that if an employee’s mother called to ask how their day went, they could say it had been an excellent day.
17. Treat your employees like your children. They need boundaries, and sometimes they need you to tell them “NO!!” But most importantly, you have to let your employees open their minds and use their imagination.
18. Don’t be greedy with your product’s price. If your product is good and also cheap, people will buy it. Later you can raise prices or create other, more expensive services and products.
19. Make yourself known. Getting known is everything. Your brand is everything, although the best advertising is word of mouth. Write a company blog, talk about your industry, and be very honest about all the flaws. Authenticity is the best brand.
20. Don’t kill yourself. No company is worth dying for. Besides, your employees need you. The sayings about chasing your dreams don’t tell you what to do when your dream turns into a nightmare. If you think the stress is going to finish you off and you don’t feel able to control it, don’t go on. At least not with this idea.
21. Give employees the means to succeed professionally. Make sure your employees know how they can find their path to success in your company. Above all, make sure they’re clear about what is and isn’t acceptable.
22. Fire employees immediately. A company can suffer from many illnesses, but there’s one that is incurable. If an employee does nothing but ask for more money all the time and still hasn’t left, invite them to leave. If they speak badly to their colleagues, fire them. If they speak badly about you behind your back, fire them immediately.
This illness has no cure, and it’s also very contagious. Show no mercy and don’t give second chances to this kind of employee, especially if you’ve done the previous points right.
23. If an employee comes to you in tears, close the door or step out of the building with them, and sit with them until they calm down. Listen to everything they have to say. If someone is crying, it’s because there has been a major breakdown in communication somewhere in the company. Listen carefully and don’t get angry with them. Just fix the problem.
24. Have lunch with your competitors. There’s no reason not to. Meet them and try to listen more than you talk. You have a lot to learn from them, too. Besides, there’s no reason not to be friends. Who knows whether at some point in the future you’ll have the chance to create synergies with them. And if your competitors aren’t entirely above board, apply the old saying: “Keep your friends close and your enemies closer.”
25. Read to understand what’s changing in the world. What are people worried about right now? It might be drinking water running out, global warming, the death of an industry or the disappearance of printed newspapers. You need to be informed about what’s happening that affects us all. Being informed can also open your mind to new business ideas.
26. But be selective about the news. As an entrepreneur, avoid extreme doom-and-gloom reading of the “the world is ending” and “everything is screwed” variety. It’s a way of depressing you so that someone else can take your money.
27. Recessions and depressions don’t matter. At any given time there are at least $15 trillion circulating in the world, so it’s a matter of finding a way to get a share of that $15 trillion. If one business idea doesn’t work, try another. If an idea dies, try another. Someone always makes money in every economic cycle.
28. Tell everyone what your company does. Even your friends can help you find customers.
29. Quickly find someone you can trust. Find someone you fully trust to come with you to meetings. The entrepreneur’s job is not to do everything, so you’ll need a second in command. Mentor that person. They’ll be delighted to take on the role, because you’ll be their mentor. But if they break the confidentiality of critical meetings or show a lack of integrity, don’t think twice: fire them.
30. Say yes to every opportunity. Whenever you can get into a room with a decision-maker who offers you a reasonable idea, say yes to the opportunity. It doesn’t matter if it costs you money. You have to try.
31. Celebrate your successes. Your employees will love it, because they’re part of the project and they’ll like knowing the company is happy with them. They’ll feel part of the company.
32. Sell your first company. Sell your first company as soon as you can. At that point you’ll have money in the bank and you’ll feel ready to build your next multimillion-dollar company.
33. Your company is always for sale. Don’t make the mistake of thinking a company is forever, especially if it’s a tech company. It would be nice if it were, but when someone offers a good price for our company, selling is probably the best option. Before he was famous, Mark Cuban sold a company for $10 million. It was with his second company that people started hearing about him.
This article is a summary and adaptation of James Altucher’s original post “The 100 Rules for Being an Entrepreneur”.
Further reading
- You don’t need an original business idea to succeed
- If you’re going to fail in business, this is the way to do it
Featured image: Chooseyourself-altucher, CC BY-SA 4.0, via Wikimedia Commons.
