StartupPro: How to set up and grow a tech business: Practical guidance on how to turn your passion, idea, and technical skills into a successful business

For example, I have a certain technical friend who called me a while back, all excited about his latest vision to solve a pet peeve of every computer and Internet user. "What if you could enter your sign-on password just once when powering on your system, and it was able to remember and supply that password to all your applications without user intervention? I'm going to write the software to offer this service!"

I'm sure you all realize that there could be quite a distance between a great idea and a great implementation, and an even greater distance to a great startup. However, many people don't have a clue on how to bridge the gap. So, trying carefully not to rain on his parade, I suggested that my friend complete the following analysis as due diligence on the idea before quitting his day job to create and roll out the solution:

Jumping into the technical entrepreneur role with just a dream and a prayer, and without the reality checks discussed in the preceding section, is called a passion trap. Most experts agree that entrepreneurial success has a lot to do with your level of passion, determination, and innovation, but these have to be tempered with some strong business principles to keep the focus on reality.

According to Small Business Association figures, about six million Americans a year make the bold leap onto the startup path, with many more worldwide, and many have no corporate safety net to fall back on. Unfortunately, less than half of these new ventures survive beyond a few years. The passion trap is just one of the downfalls.

I'm sure we have all seen entrepreneurs with high levels of passion and confidence touting an idea that seems to make very little sense to us. Of course, we never see ourselves in this mode, yet we need to recognize that all humans see reality...

Every engineer who has invented some new technology, or is adept at creating solutions believes that is the hard part, and that it should be a short step to take that solution to the market as a technical entrepreneur. In reality, that short business step embodies far more risk, and a poor technology solution is not near the top of most lists on common reasons for business failures (http://www.moyak.com/papers/small-business-failure.html).

In fact, a Duke and Harvard survey (http://blogs.berkeley.edu/2011/03/22/engineering-vs-liberal-arts-who%E2%80%99s-right-%E2%80%94-bill-or-steve/) of over 500 technology companies showed that only 37 percent of their leaders even have Engineering or Computer Science backgrounds. Clearly, engineers should think twice before assuming they have an advantage over the rest of us towards being an entrepreneur.

A good Engineering or Computer Science background does not necessarily...

There is nothing like a group of peers and a few sage advisors to help you zero in on the real challenges of your dream. Before you finalize your course in building a technical solution and commit your resources to the entrepreneurial effort, it makes sense to visit and perhaps join one of the local startup incubators in your community or university.

First, however, let me put your expectations and their role into proper perspective. More and more technical entrepreneurs are telling me about the successful graduates and investors queued behind a few well-known startup incubators, including Y Combinator, TechStars, and the Founder Institute. They dream of appearing at the door with their idea on the back of a napkin and popping out a few months later with investors' money to burn. The reality is far different. More often, aspiring entrepreneurs pop out with the realization that their dream is not really the opportunity for them...

Most of the technical entrepreneurs I know are classic proof of the old adage that people tend to overestimate what they can do in a short period, and underestimate what they can do over a long period. They become frustrated when they are unable to build their startup in a weekend, and give up way too soon when the path to real success seems to be interminable.

Both problems can be mitigated by learning the power of frequency, as defined in a recent book by Jocelyn K. Glei, Manage Your Day-to-Day (http://www.amazon.com/Manage-Your-Day-Day-Creative/dp/1477800670), which asserts that working consistently and frequently on something makes it possible to accomplish more, with greater originality, than spasmodic bursts of effort. A successful startup needs to be a daily task with consistent focus.

I suggest that the following key reasons from Glei for how the habit of frequency fosters both productivity and innovation in general, apply especially...

Even if you have that day-to-day focus on building and honing your product, every technical entrepreneur needs to face the challenge of knowing when to stop building and perfecting your product, and start selling it, even if building it is more fun than the business side.

Scope creep (or feature creep) is an insidious disease that kills more good startups than any other, especially high-tech ones, and yet most founders (who may be the cause) never even see it happening. This term refers to the penchant to add just one more feature to the product or service before its first delivery, just because you can, or you perceive the customer needs to have it. Other excuses often given are to occupy the market as soon as possible, or to collect feedback from customers and improve the product.

The instigators are all well-intentioned—executives talk to potential customers who "must have" a few more things, or the technical team prescribes...

When you think about going to market, or even look hard at the market, the customers that technical entrepreneurs most easily relate to and depend on are early adopters. The conventional wisdom is that early adopters are the ideal target for new products, to get business rolling. Early adopters are great, but I see two pitfalls with any conclusions based primarily on early adopters; first, the size of this group may not be as large as you think, and secondly, their feedback may lead you directly away from your real target market of mainstream customers.

The term "early adopters" relates to the people who are eager to try almost any new technology products, and originates from Everett M. Rogers' book, Diffusion of Innovations (http://www.amazon.com/Diffusion-Innovations-5th-Everett-Rogers/dp/0743222091). Early adopters are usually no more than 10 to 15 percent of the ultimate market potential, and marketing tothem may be necessary but not sufficient in...

Technical entrepreneurs always work hard to create an innovative product or service, but often count on standard seller marketing for sales. However, the reality is that sellers are no longer in charge of the customer-buying process. Current reports (http://chiefmarketer.com/online_marketing/0329-consumer-power/) suggest that 90 percent of today's shoppers skip marketing pitches, research online before they buy, and over 50 percent check user reviews before making a decision.

The Internet and smartphones have changed everything. Kristin Zhivago, in her book, Roadmap to Revenue (http://www.amazon.com/Roadmap-Revenue-Sell-Your-Customers/dp/0974917923), makes the point that the selling system is broken, since sellers no longer sell the way customers are buying. Here is my summary of her detailed roadmap to get you back on the right track with a "customer-centric" approach rather than a "company-centric" approach:

Women entrepreneurs are starting small businesses at approximately twice the national average for all startups, and many of these are technical entrepreneurs. Despite some inaccurate stereotypes, the evidence is that these are in every industry, from small technical consulting firms to medical high technology. As a result, there has been a lot of focus on any possible unique challenges for women, while trying to assess the opportunity, and beyond.

In most cases, the business questions asked and the answers given are essentially the same for all entrepreneurs, whether they are men or women. However, according to a couple of articles I've seen recently by Peri Pakroo, J.D., who just published a book titled The Women's Small Business Startup Kit (http://www.amazon.com/Small-Business-Startup-Step-Step/dp/1413316840), the road to success for women does involve its own unique set of hazards. Peri keys off the messages from Sheryl Sandberg...

An entrepreneur's overall evaluation of an opportunity operates off a set of tenets that are built into their psyche, or drilled into them from training and mentors. These are often represented by sayings like "You never get anywhere unless you take a chance" and "Passion and persistence are the keys to success." In my experience, these don't always work, so don't rely on them totally to validate your entrepreneurial dream and passion.

Real technical entrepreneurs must have three things: the ability to identify or recognize an opportunity, the ability to review or assess an opportunity, and last but not least, the ability to successfully execute and realize an opportunity. While these tasks seem straightforward on paper, the skills you need for each one are very different, and it is difficult to be good at all of them. To be a successful technical entrepreneur, you need to have all three, in the right order and at the same time.

The people who typically excel at opportunity recognition...