Why Selling To The Government Can Downgrade Your Startup

Article first published as Why Selling To The Government Can Downgrade Your Startup on Technorati.

DepressionFirst Greece, now Spain and Italy. Across Europe, historically solvent sovereign governments are suffering from an acute case of systemic deficits. Now, more than ever, government agencies in the US and abroad are lousy startup customers.

I am not a government contracting expert. In fact, during my many years as an operational entrepreneur, I explicitly avoided working with governments, for the reasons described below. However, I am familiar enough with the government procurement process to know that it can result in the down grade of an unwary startup’s credit rating.

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Best of Show

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Warning: tradeshows are highly emotional, ego-driven events – do not get sucked into the hype.

Despite what the most earnest Marketing Executive will tell you, tradeshows never make or break a company. Ignore your sales and marketing people when they tell you that your company will be embarrassed if you do not purchase an expansive, $150,000 booth. They should be embarrassed for uttering such ludicrous advice. If one or more of your team members has booth envy, require them to memorize the refrain from Public Enemy’s “Don’t Believe the Hype”.

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Beware The Consultant

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Once you obtain funding, it will be worse than hitting the Lottery. Instead of hearing from your long lost third-cousin, you will be inundated with an avalanche of ‘congratulatory’ emails, calls and letters from people who want to relieve you of the burden of your hard-earned equity round. Many such ‘congratulations’ will come from consultants.

An entrepreneur’s two most important assets are her time and money. There is nothing under the sun that will suck up your time and money faster, more prodigiously and less effectively than a consultant.

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Frugal Is As Frugal Does

frugal.JPGRichard White, author of The Entrepreneur’s Manual, surveyed a number of venture capitalists, asking them to identify the characteristics of successful, serial entrepreneurs.

One of the attributes identified by all of the venture capitalists questioned was, “Frugal use of capital”. In fact, several of the venture capitalists pointed out that successful entrepreneurs often have to be encouraged and pushed to spend more aggressively. Successful, serial entrepreneurs on The Fringe instill an urgent sense of frugality into their adVenture’s corporate culture.

“Bah humbug” you say? Read on.

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