As a three-time founder, I’ve learned lessons that can make or break a startup. I’m here to share easy-to-implement concepts that can make your job easier, help grow your company and set it up for long-term viability.
After acquiring funds, first-time founders are often left asking “What’s next?” Obtaining investment is important and exciting, but it also brings with it challenges and expectations. If you’ve never built a company, deciding the best path forward can be daunting.
I’m currently on my third startup, having previously built and sold the first two. My three companies have been in very different industries: travel, music and accounting automation. What I’m going to share below has been true for each venture, regardless of the industry we focused on.
I’m applying the lessons I’ve garnered to my third venture, and I want to share some of them with you in the hope that they can save you time, money and stress and, ultimately, help you build a successful company.
1. Solve For Something People Need
As you start to build your technology, platform, products or services, you should be in constant contact with parties that you see as potential customers. You should be meeting regularly with people to ask them what they need a company like yours to provide for them.
In doing so, you’re likely going to hear varying opinions. If you speak to enough people, a pattern will emerge where many of them will say “what we really need is this and we can’t find it anywhere.” That’s where your focus should be. Build your company to solve a specific need common to many of your potential customers. It’s the most effective way to turn them into actual customers. Simply put, solve for need-to-haves, not nice-to-haves.
2. Focus On What Matters Most
Build this solution or product until you know it works well and solves the need. You need proof of concept before you start marketing it to clients. If your solution works, rather than being in a state of flux while you’re selling it to clients, you’ll build a base and increase revenue.
From there you can move on to creating additional products, using a similar approach to how you identified your differentiator in the first place. Talk with your clients or customers. Identify issues or problems that the majority — 80% of them or so — have, and then focus 100% of your energy on solving those problems. Tune everything else out.
3. Hire Executives And Entry-Level Positions Simultaneously
One of the most impactful changes I’ve made as an entrepreneur is my approach to hiring, which is to build the team top-down and bottom-up at the same time. Whether it’s the weight of responsibility, financial concerns or something related to control, founders too often try to perform the responsibilities of an entire executive team.
By hiring at both the executive level and entry level at the same time, you can scale faster and build a solid foundation that will create a stronger team. And for founders, you can make your life easier while being more effective and productive.
4. Grow Responsibly
When you find investors, they’re almost sure to push you to grow as quickly as you can. It’s a concept so intertwined with being a startup that most founders internalize it and think that rapid growth is the only acceptable or viable solution. But not all growth is good.
First, you have to structure your team correctly to ensure that when growth happens, the foundation is solid, aligned and ready to accomplish the right tasks. Building too rapidly can often cause a company to be moving in too many directions at once, and eventually, cave in on itself.
Another growth issue startups encounter is going to market too soon. Some companies race to acquire customers before they’re really ready to provide the right experience. If your product isn’t fully ready and there are still glitches in the matrix, anyone you sign up is going to have a bad experience — which, in the long run, means your initial growth will stagnate or reverse. Achieve proof of concept first, then start to grow your team and client base.
5. Control And Understand Your Spending
The majority of first-time founders don’t come with a business background, which makes understanding all of the financial decisions a founder has to make more daunting. The average seed-stage startup spends tens of thousands of dollars a month. By the time they’re Series A or Series B, it can balloon to six figures. That’s a lot of money. Where’s it all going?
The reality is, most founders don’t entirely know where their money is being spent. Expenses vary month to month, particularly during periods of rapid growth. Whether you’re working with an in-house or outsourced accounting team, getting accurate, real-time answers about your spending is next to impossible. Traditional accounting relies on month-end reports, which can take weeks to compile and create.
In the fast-paced world of startups, that doesn’t cut it. If an expense to a particular vendor raises 300% in a month, you need that information right now to know how to proceed, not a month from now.
Advances in artificial intelligence (AI) accounting can now give founders a clear understanding of their spending, without a team necessary to compile and explain complicated financials. This allows founders to make much more informed decisions and respond to fluctuations in spending immediately, rather than down the road. It’s still up to the founder to practice fiscal responsibility, but the AI breakthroughs in accounting can take away the biggest hurdle to doing so by giving you up-to-date financial transparency.
Give Yourself The Best Chance
There’s more to being a founder than the five concepts I’ve outlined above. Entrepreneurs have difficult decisions to make, with a lot of responsibility on their shoulders. But I’ve found in my three companies that these five practices are things you can control that give you the best chance to succeed, no matter what industry you’re in.