Your business is just getting started, but you’ve got some big plans for it. Between working weekends, ignoring your need for sleep, and devoting all your resources to getting your business running, you’ve been setting goals for your startup’s first year. You’ve probably heard of startups achieving amazing goals in their first year. However, you’re already working yourself to the bone and can’t afford to waste your energy on unrealistic goals. Are incredible goals reasonable for a first-year startup?
Some startups seem to explode in growth in their first year. For example, LootCrate, a subscription box service, was able to start its business and grow a customer base over one weekend. The founders came up with the idea at a startup event and immediately began taking orders from customers. If they were capable of getting all that done in one weekend, what does it mean for your business? Can you attain all your goals in your first year?
Not necessarily. Every business is unique and achieves its goals at its own rate. Not all your business goals are reasonable for your first year. Because you have limited time and resources, you have to prioritize the goals your startup needs to get past its first year. In that case, what are some realistic goals you can reach in your first year?
Your company is just starting out, so you may not know how to run it at all, let alone sustainably. Creating a business model lets you figure out the important details that lead to a lasting business. A well-crafted business model can also attract investors or a loan from a bank.
To create a business model, you need to find the answers to some crucial questions, such as:
Don’t be afraid to be original. You don’t need to copy business models from your industry. Some extremely successful businesses, like Hilti, were founded on a unique business model.
Hilti turned the construction tool supply industry on its head when it decided to rent out tools instead of selling them. By renting, construction companies no longer need to maintain a warehouse of tools. They can get the tools they need when they need them using Hilti’s service.
Creating a business model can make your business thrive. However, there are more ways to make your business succeed. What else can you do to nurture your startup?
New businesses don’t usually break even in their first year. To keep your startup afloat, you need to have enough cash on hand to weather the storms. Ensure your startup lasts longer than a year by managing your cash flow.
Managing your business’ cash flow can be as simple as making a cash flow statement. A cash flow statement shows whether your business will have enough money to pay bills and make payroll.
If you discover problems in your company’s cash flow, it’s not too late to turn things around. Try asking for an extension on bills, a later due date for payment, or bill your customers earlier. As a last resort, you can change your financial strategy entirely.
T.C. Elli’s, a clothing retailer, hit a rough patch during the 2008 recession when they weren’t making a profit. The company was doing so poorly that the owner had to put her personal savings into the business to keep it going. To stop this from happening again, the founder started offering lower-priced goods and making more cautious financial decisions. Decisions like these helped her revamp her business’s cash flow.
Now you understand how to manage your cash flow, but what can you do with the cash you’ve got?
A minimum viable product is an early, simplified version of your final product. You can use a minimum viable product to test your concept and get early feedback. Use the results of the test to make adjustments before producing the final version.
Creating a minimum viable product starts with defining what “minimum viable” is for you. What’s the most basic form of your product that still has its distinguishing features? In the creation process, focus on the essential elements. Then, get early feedback from customers on the concept and product. Don’t freak out if feedback isn’t what you expected. You might have the beginnings of an entirely new business opportunity.
Groupon’s creator began with a completely different website. His original site helped people organize boycotts and fundraisers for important causes. When that didn’t pan out, he came up with a new idea based on a group coupon deal that happened on his old site. He made a blog called the Daily Groupon. At first, his team had to post each deal manually. However as people started using the site, it showed the idea was valuable.
Creating a minimum viable product is vital to your business because it shows whether your potential customers like the product enough to make your idea worthwhile. Once your product is ready, there’s one more thing you can do to help your startup: Analyze your market.
If your startup is going to survive, you need to understand your market. By knowing your client base, you can improve your product and marketing.
To understand your market and figure out if your business model will work locally, look at what’s happening in your area and industry. Is there a market in your area? How many competitors are there? Get this information from trade organizations, industry leaders, and local businesses. Also, visit your local library for industry-specific books. Revise your business model as needed.
Find out more about your client base by investigating their buying habits. Interview prospective customers, or have them fill out short surveys. From their answers, create in-depth buyer personas of your clients to guide your decisions.
Plenty of businesses benefit from understanding their clients. Netflix is a perfect example. It collects data from existing customers to give them personal recommendations for shows and movies. Netflix also uses this information to create original content clients will watch. By researching its client base and market, Netflix has created a more engaging service.
Researching your market and client base can improve your business’s product or service. It’s a valuable goal for a company’s first year. Now you know what goals are reasonable for a startup’s first year. Why are reasonable goals so important for startup owners?
Some startups seem like they get everything done in a weekend, but reaching first-year goals usually takes a lot of time and effort. Don’t overwork yourself for unrealistic goals.
To keep your workload manageable, set reasonable goals. Reasonable goals for the first year include making a business model, managing your cash flow, and researching your market. Also, be sure to get feedback and tweak your product or service before going live.
Focusing on attainable goals means your hard work will pay off. By reaching these goals, you can expect your startup to last long past its first year.