Startups face several problems as they work their way towards success and growth. Besides operational hiccups entrepreneurs also grapple with ethical dilemmas.
The global economy without doubt shows signs of picking up and market sentiment is highly positive in several key economies. There are new companies being launched today than ever before and there is a good chance that if you find a perfect product for a niche market then success will not be hard to achieve.
A first time entrepreneur will not be able to imagine the hardships that are about to come in the way when setting out to make their dreams come true. The best thing you can do as a startup owner is build a relationship with a mentor who has experienced the same earlier.
Here are a few tips for the first time entrepreneur to prepare for the road ahead and tackle problems wisely.
1) Time Your Entry
Though the most popular picture of an entrepreneur is that of a twenty or thirty something geek with a disruptive idea and passion to change the world, it is not always true.
If you have work experience and have worked in a related industry for several years then you will have deep insight and understanding of the line of work. This will help you anticipate performance pressures and customer expectations better.
Also a startup will take up all of your time and attention which will make family life difficult, especially if you have young children who will resent your long absences. All-consuming entrepreneurships strain marriages leading to break ups and divorces. You may argue that your family also stands to benefit if you strike it rich but the fraction of startups going on to succeed fabulously is very small.
Evaluate the stage of life you are at and decide whether you will be able to withstand the demands and pressures of the dual role of an entrepreneur and a spouse/parent.
2) Hire Right
One of the biggest mistakes of an entrepreneur is that he or she functions in the belief that the company rests solely on his capabilities. This may be true to a great extent but it is important that you build a robust team that is capable of running the company as a functional sum of coherent and indispensable parts.
The biggest challenge that faces a startup founder is getting the right talent on board. Have a proper, vetted and exhaustive interview system in place that assesses soft skills, technical expertise and emotional intelligence of a candidate. Startup environments can be highly demanding and intense. Hire people who will be able to excel and thrive in this environment and deliver great results under pressure.
Hiring too fast can damage your company. Fast growth and rapid customer acquisition can lead to a hiring spree, but many startups have failed in the past due to reckless hiring policy. As per the 2011 Startup Genome Report premature scaling was the major factor contributing to failure of 74% high growth internet companies.
3) Manage Cash Flow
Cash flow is the life blood of any business and is absolutely necessary to fund all activities from payroll to advertising to rent and utilities to even acquisitions.
Ensure that you keep a tab on each and every pie that comes in or goes out of your business. Streamline spending and ensure that you do not splurge anywhere unnecessary. If you are a tech startup all your focus should be on building a prototype that does justice to your ideation and can be used to assess market potential and boost investor confidence. You cannot focus on snazzy ad campaigns or social media marketing in this phase because you will burn through your all-important cash stash.
Lumpy cash flow can result from stupid spending, seasonal fluctuations, delayed invoices or unexpected expenses. It is not very easy for a young business or startup to raise quick business loans. Traditional loans require elaborate paperwork and long waiting period for approvals. You also have to meet strict eligibility criteria that make it very difficult for businesses with short track records to access loan.
Non-traditional methods of financing like crowdfunding, peer-to-peer lending, factoring, working capital loans and merchant cash advances are some of the options available for startups.
Asset based financing San Diego allows you to raise loans on secured business assets like accounts receivable, inventory or any other asset in the balance sheet. You get to enjoy lower rates of interest and can access money to meet immediate needs.
Accurate and timely invoices, professional accounting practices, limited free trials for products/services, smart inventory management, diligent hiring and optimal vendor management are all essential if you want to keep cash flow in control. Once you get the basics right you will not find your company’s cash reserves burning out like it is not is fashion any more.
4) Be Flexible
Startups have very limited exposure to time and money. They need to launch a product, or test a prototype or beta version, gauge feedback, make changes and hit the ground running.
It is important that your core team functions closely and in tandem. Workplaces are often of open plan where team members work together day and night. Proximity among important members ensures that you all are on the same and quickly-turning page.
In order to keep your young company nimble and quick, ensure that you have immediate access to customer feedback and the loop is kept as short as possible. This will allow you to improve your product and test better versions as fast as possible.
Flexibility will also help you realize when your product is not taking off as expected. There are many examples where companies have pivoted and relaunched themselves successfully. An open-minded approach will help you learn from your mistakes and make smarter attempts.
5) Trust a Mentor
According to the latest Startup Genome Project report entrepreneurs with mentors grew 3.5 times faster and raised 7 times more investment than their counterparts with no mentors. Now you know why you absolutely must have a mentor helping you with strategizing, marketing, financing and scaling your company.
A mentor who is held in esteem in your industry will lend credibility to your startup and you will benefit from his or her insight and experience.
Startup ecosystems are in one of their most nourishing stages right now. Do not shy away rom chasing your dream. By following the right steps and believing in yourself you can very well realize your entrepreneurial ambitions.