Startups are notoriously risky businesses. They’re often in the tech industry as a dot com, but really any new business is a startup. They all have similar identifiable struggles which cause many to not survive their cash-burn rate.
In this article, we look at four factors that help to make a startup successful over ones that don’t fair as well.
A Good Eye on Margins and Profitability
When trying to get great results, it still comes down to profit margins. Even when costs are lower, whether running a physical goods business or selling digitally, smaller companies are usually strapped for cash. Because of this, the tighter the margins are for each sale, the more difficult it is to scale that to profitability at the company level too.
To earn money online, using a profit margin calculator like the one from Oberlo.com is useful to double-check the figures behind product sales. But it also serves as a good reminder to never lose sight of the basic numbers behind the operation.
Hiring Well
With a small team, deadwood in the form of personnel who aren’t hard workers and don’t care to be is a serious hindrance. Not only that but if they’re a negative person who’s bringing that attitude into the office, it spreads quickly to mess with a positive go-getter culture.
Finding great talent isn’t easy because attracting them to a new startup is tough. Nevertheless, it’s still necessary to be precise about who is hired because a 5thor a 10thperson in the company has a huge influence on the outcome for the company. By comparison, the 99thperson is far less pivotal, especially when part of a small team in the first year or two until there’s sufficient profitability or additional capital raises to scale the size of the workforce.
Running Lean from the Start
The tendency, especially when funded by venture capital or angel investors, is to splash out on expensive office furniture, IT equipment, and the rest. Burning through investment capital this way leaves too little remaining for working capital and future expansion. It also causes the founder(s) to go cap-in-hand to the original investors for another round of funding and giving away extra equity to secure it.
By running lean across the board, it cuts the fat from the budget. Bear in mind that you still want to invest in smart R&D projects with the potential to become a new best-selling product. Don’t sell the company short by underfunding potential growth. Find the right balance here.
Marketing Creatively
With a limited marketing budget, getting creative is required to stretch the dollars to the maximum.
Standing out from the crowd is necessary to get noticed by potential customers. This often means thinking outside the box to surprise, amuse or simply grab the interest of people in ways that more serious businesses won’t risk doing.
Startups can become hugely successful, but they require great execution and management to do so. By following the above tips, you’ll be one step closer to owning a valuable business.
