Startups are a crucial part of any industry and none more so than the technology sector. A thriving culture of entrepreneurialism can do wonders for a country’s economy, as places like Silicon Valley and London’s Tech City can testify. It is not surprising,therefore, that in the run up to the general election, many political parties in the UK were keen to highlight the importance of small businesses.
That being said, the media focus on the huge financial successes – the likes of Airbnb and Spotify – means that it’s easy to make the mistake of thinking startup is a byword for success. That doesn’t mean you should give up on your hopes and dreams, far from it, but sometimes taking a step back can help your company move forward.
- Building a business takes time
Startups are more likely to fail than succeed, so the hype and pressure that accompanies smaller businesses is largely unjustified. The uncertainties surrounding the launch of something new means the likelihood of success is weighted heavily against a new business. Estimates vary, but approximately nine out of ten startups will fail.
And it is easy to see why. New companies have to manage product development, technology, customer service, finance, marketing and HR at a time when expertise and resources are likely to be limited. If even one of these areas fails, it can cripple a startup. When all this is taken into consideration, it’s important to keep calm before betting your house on a new company.
Unforeseen and out of your hands, setbacks are sure to strike your startup at one point or another. While larger, more established companies may able to mitigate the damage caused, for startups the hurdles can sometimes seem overwhelming.
Employees leaving to join competitors, investors backing out, legal challenges – there are a host of problems waiting to derail your business, which is why it is more important than ever to keep a cool head.
Risk management is a great start and is an important aspect of any business, no matter how well established it may be, but startup founders are well aware that even the most well prepared businesses can’t be ready for every eventuality.
Growth, growth, growth. Startups need an insatiable appetite in order to gain customers, increase revenue and grow the company. However, going one hundred miles an hour all the time can cause just as many problems as going too slowly.
Take time to assess what your customers want, what your competitors are doing and the state of the market. Perhaps more importantly, scrutinise every piece of information you receive before acting on it. If customers are asking for more features to be added to your product, don’t simply add them and see what happens. Are they relevant to your product and will they take the business in the direction you want it to go in?
Startups may not know where they’ll be exactly in five or ten years’ time, but it’s important to have a set of targets or goals to ensure that momentum doesn’t come at the expense of direction.
Of course startups want to grow, but are they in a position to do so? Upscaling is not simply an opportunity, but a challenge as well. More customers inevitably means more staff, larger premises and a greater strain on your technological infrastructure. Before startups actively look to expand, some careful planning is in order to ensure that growth occurs as smoothly as possible.
If the upscaling process is a disjointed one, then customer service is likely to take a hit and new clients can be lost just as quickly as they were gained. Moreover, businesses must be ready for the quiet periods too, making sure their infrastructure is agile enough to match demand and ensure efficiency at all times.
It’s important to record everything you do in the early days of a company: both the good and the bad. Monitoring your company’s progress can be time consuming, but it is crucial for determining your progress.
Staying on top of the company figures is also key, particularly if you want your business to gain the confidence of others, namely investors.
Read more: Why the cloud is perfect for startups
With today’s fast moving digital economy, startups have to move quickly to avoid being left behind. However, that doesn’t mean there isn’t time to take stock of where you are and where you need to be going. Startups need to keep moving forward, but to do so, they need to keep calm.