The 3 Lessons I Learned as A Saudi Entrepreneur
By Shereen Tawfiq: CEO of Balinca
Key Highlights
- About 2.75 in 5 new businesses don’t make it past the 5th year of operation (US Bureau Labour Stats)
- If your business can’t afford your salary, then something is wrong
- While setting up your company, you need to have your books in order
- Do not assume you have a market because 5 of your friends said they will buy it from you.
“You’re doing it all wrong ”
“You’re going to lose your money ”
“ It’s too risky, just give it up ”
These are just some of the harsh statements I heard during my challenging, yet rewarding entrepreneurship journey. Yes there were times I felt like quitting, and others where I felt I was on top of the world.
And while you may feel excited to bring your own startup ideas and plans to the world for fruition, here are some of the hard-learned lessons I have picked up along the way that may spare you a few disappointments:
- Allowing Your Excitement to Cloud Your Judgement
Before I launched my 1st business eleven years ago, I locked myself for months trying so hard to make my product, my website and all marketing materials perfect. Yup, perfect! I was doing a lot of online research but never spoke to even one end user or one potential customer.
My idea was to offer a new financial modeling training in the region. I had a competitive advantage since no one else was offering it and I knew the region even more than the 3 top companies situated there who are headquartered in the U.S. and U.K., who still lack deep knowledge of the MENA region, yet still want to take part in the business operations of the region.
I knew the numbers made perfect sense, like how many people would potentially need my service. I collected all the data that supported my hypothesis to prove to myself and others that I was on the right path, but this all was market research reports and online research. I should have gone to stakeholders and listened to their issues to understand to whom am I serving this data and what is the problem I am solving.
Although the gap was there, my timing was off. I went on and invested a big chunk of my savings, meeting banks and other finance companies.
I then realized that I was going after a very niche segment and that business did not see the light of day before it even got to test it.
The Problem: You might have a great idea, but with the wrong timing and wrong execution, you will be back to square one in no time.
Every idea needs testing to make sure that people are willing to buy your product or service. This is why entrepreneurs should test their products and services with various focus groups and incorporate feedback. On a side note, beware of biased feedback and review because entrepreneurs reach a point where they fall in their product a little too much that they choose or analyze their results based on positive feedback to prove that they are on the right track, which is not always the case. You will have to receive both positive and negative feedback because that’s just how things are and have to analyze rationally and accordingly. When people who don’t know you on a personal level like your product or service more than the ones who don’t, then you become onto something that opens future opportunities.
The Lesson: I advise entrepreneurs to physically observe customers and users’ behaviors around the product or service in question. Do not assume you have a market because 5 of your friends said they will buy it from you. Your biggest testing is observing and analyzing how a stranger reacts to your product instead.
- Giving Yourself the Wrong Salary
The Problem: Many entrepreneurs go for years paying themselves a fraction of their market value, only to wake up one day seeing their company on life support and frail, crumbling at the first windbreak.
“Paying yourself too little or too much is a mistake. It’s often easier to determine the salary for a new hire than determining an owner or partner’s pay. Consider paying yourself a percentage of revenue. Whatever you choose, figure out your pay, and that of your partners, a practice and foundation to healthy expectation of management.” – Diana Santaguida, founder, Agency Undone
The Lesson: I know at first you won’t have money to pay yourself because you will be needing to fund other functions in the business, but as the business operates and generates revenue, you will need to pay yourself at par with your value in the market. If your business can’t afford you after 4 years of operations, then something is wrong and that should be your first warning sign.
- Not Pursuing a Proper Bookkeeping Process
The Problem: “Many startup founders begin without a bookkeeping process in place. Great bookkeeping habits help you make smarter business decisions, spot opportunities early on, and head off problems before they become unmanageable. Understanding your finances helps to keep a pulse on your business’s financial health. Good bookkeeping practices also ensure you’re on top of issues like tax and insurance payments that can get otherwise great businesses into trouble.” – Paola Garcia, vice president, Pursuit
While setting up your company, you need to have your books in order to protect yourself. For example, if you use your personal credit card (which is something we all did) and you don’t report it in your books, then claiming it later will not be possible.
You also need to understand all legal implications of your decisions to protect yourself and your team from an early stage. At the beginning, equity is cheap, but as you grow your business, you add value and make your equity more expensive. Be very selective with whom you decide to bring on board, and see if they have the right skills and attitude to grow your business. I know it’s sad but this is the truth.The people and skills that you need at the beginning may not be the same people and skills that you need at a later growth stage of your business.Even you as a CEO, you might be fit to take your company from zero to a million dollars but you might be not the right CEO to take your company to $ 10m Build policies and systems as if you are already a well established company.
The Lesson: Launching a new business is anything but easy.
According to the U.S. Bureau of Labor Statistics, more than 18% of new businesses fail during their first two years of operation, and more than 55% of all businesses don’t survive past the fifth year (Schooley, 2023).
It takes a team to create a successful business, so surround yourself with mentors and subject matter experts you can depend on. Instead of being scared of failure, learn from your mistakes and other people’s failures and pivot your company’s strategy accordingly. In order to improve your services and better fulfill the demands of your clients, test new concepts and rely on feedback.
While developing your company, there are a number of startup mistakes you’ll wish to avoid, but errors will inevitably happen from time to time. Don’t be too hard on yourself throughout the process. Taking what would initially appear to be bad news, learning from it, and using it to your advantage are some of the smartest steps you can take.With such an outlook on things, business success could be just around the corner.
Bio: Shereen Tawfiq is the CEO of Balinca
Shereen was the first Saudi female corporate banker to work at Banque Saudi Fransi and the first Saudi woman to participate in an expedition in Antarctica. In 2007, Arab News selected Shereen as one of the top 20 Saudi businesswomen.
In 2012, Shereen went on to become the first Saudi woman to graduate from the Wharton School – MBA Program, majoring in Finance. In 2015, Shereen was appointed as Advisor to His Excellency The Minister of Economy and Planning in Saudi Arabia.