Let’s face it. Startups are unsteady things. You might not be paying yourself enough, and revenue is irregular. Is your product tested? Have you hired the right talent? Uncertainty reigns.
Your startup might not even exist months from now. Every year, about 500,000 businesses are started. Most fail within the first few years. Why is it so hard to gain stability when you’re starting out?
Becoming stable is tricky in startups because you need to be two things at once: committed and flexible. You’re investing time and money with a hopeful glimmer of a return later. At the same time, you need to be flexible enough to take on new ideas, grow, and learn.
Balancing all these qualities all the time is tough, but it can be done. Plenty of people have managed the process and become startup success stories. Although statistics show only one out of every ten startups gets there, it is possible.
Using the tips below, you can shore up your fledgling startup into a stable company with repeat business.
Founders are by nature ambitious, which can mean being impatient to reach your goals. While most startups fail in the first four years, part of success is hanging on longer than your competitors. By the time five years comes around, your business has longevity and, thus, credibility.
The myth of the solo founder following the American Dream is a great story. However, nobody’s perfect. Unexpected problems always come up. Having a seasoned industry veteran around who has been through it all before is invaluable.
In fact, of the entrepreneurs that do succeed, they tend to succeed again. One study found that repeat entrepreneurs are more likely to find success than first-timers. Also, venture capitalists are better at picking founders who are not on their first business.
It might seem like work is all go, go, go. Time, as they say, is indeed money. While you need to devote time to your startup, take care to be mindful with your time.
Is the startup your life? Are you working in, around, or for your business? What’s driving you? Find time to focus on the months and years ahead rather than your day-to-day burden. To give your startup more stability, you need to plot a smoother growth chart. To plot growth, you need to be able to step away from your immediate tasks and take in the broader view of where your startup is going.
A big investment from a venture capitalist might seem like it brings stability. While you’ll get a funding boost, you’ll lose full control, add on stress, and build up admin busywork, such as creating reports for investors. Remaining in control early on is vital. You can ease off on bootstrapping later down the track when the business is sustaining itself and supporting growth.
Also, expensive items can be distracting. Art, conferences, or excellent locations are mood-improvers, but making money should be at the front of your mind at all times.
Stories abound of startups running up credit cards to kick start cash flow. This sounds romantic, but it’s much easier to run a business when you have a hefty financial buffer. People aged 25-40 are most likely to be entrepreneurs. Why? Because they have the financial means.
In general, the better of an accountant you are, the more likely you’ll succeed. Keep an eye on where every cent is going in and out of your organization. A useful metric to follow is profitability versus time.
Break your goals down into the SMART taxonomy — Specific, Measurable, Attainable, Relevant, Time-based. Plan for the best and worst case scenarios. Have emergency procedures in place. The better your forecasts are, the more likely you are to reach your goals.
In today’s globalized economy, everyone has a business competitor nipping at their heels. If you don’t, you just don’t know about them yet. Research the difference between direct versus indirect competition and bring this awareness to your management processes.
You have intuitions about your product or service and how it fits in the market. Don’t ignore them. Make sure to back your hunch with beta testing, market research, or focus groups.
Some of the best companies in the world avoid these buzzwords. It’s possible to be a success by putting a small variation on something else. Small changes work because they’re a natural, repeatable process of fine-tuning, which is more manageable than completely transforming an industry.
You might hit some hurdles along the way. This is when you have to be open and flexible. Think of trying new markets, testing out product changes, or asking for mentor advice.
This one is simple: Talk, ask, consort, and linger in the forum. Go out and seek knowledge of the people who will actually use your product.
Some measurements are more critical than others. Startups that know the difference perform better. For example, if you are in a user-created content business, then what’s important is content creation, engagement, sharing, and — if you can — going viral. However, in e-commerce, you should focus on conversion, cart size, abandonment, and profit.
Different metrics matter in each stage. It starts with inception then market research followed by testing and scaling up. When you’re starting, revenue is paramount. However, as you grow, you might shift your target towards profits, leadership, and referrals, which help you build continual expansion.
Instability is hard. However, there’s a good reason startups are volatile: social impact. Many of the world’s smartest entrepreneurs could slide into a Fortune 500 company. Instead, they choose to run their own company. They bring forward their idea, product, or service. They don’t do it because it’s easy. They do it to get control, forge a path, and change society for the better.
Crowdfunding platforms are an excellent example of startup thinking. With an idea for social good, you can raise millions of dollars from strangers. Kickstarter used this model, moving from 40 funders to 5.7 million in its first five years. Total investments have gone from $1,000 to over $1 billion. Moreover, Kickstarter has boosted many other startups along the way.
Startups are unstable and high risk, so focus on the potential reward. Use the tips above to find benefits for yourself, your business, and society at large.
Finding the right talent is another essential element to building a startup that creates real impact. Speak to one of Trusted Employee’s sales reps and learn how a background check could add certainty to your hiring process.