Startup Growth Management

Experiencing startup growth is an outstanding achievement for any entrepreneur. However, with startup growth comes new hurdles you will need to face head-on. Too much growth is what we call a “good problem” to have, but if your new challenges aren’t solved appropriately, you could end up dealing with some serious consequences.

Every new business will face challenges, but, not every business will know how to deal with them. When you start to experience startup growth, keep these things in mind.

Stick with What You Know Best

This phrase means a couple of things. First, as an owner, your time is very valuable. You should be spending your time in places where only you know the ropes. Don’t take on more than you can handle, and, if you have someone on staff who can take care of something more efficiently than you can – it’s time to delegate.

The other side of this is to keep your efforts on what you set out to do. If you have a great product or service that’s working, stick with it. It’s always very tempting to expand into new domains but, this can introduce some unnecessary risk. The CEO of Meetup said it best.

“startups die of indigestion not starvation.” – Scott Heiferman

Explore Your Biggest Hurdle

One of the biggest obstacles any business will face is finding and training the right people. Not having the best staff for your business will hurt your chances for growth and is horrible for managing startup growth.

High turnover rates drain a company of time and money. Spend a little more time finding the right person who will take their training and stay with your business. You’ll save a lot of time and avoid many headaches getting the right people for the job.

Find New Strategies

It’s natural to keep on with strategies that you know well. However, as the landscape evolves, new strategies will be required. One example could be not engaging your business in social media or starting a blog. In this case, don’t just continue with what you know, especially when it begins to fail or prevent startup growth.

Get into Bootstrapping

Just because you’re starting to see some startup growth, don’t succumb to the temptations of spending more. Buckle down and build up your company’s resilience. Growing spending is a common mistake many startups make. They start to see more income and immediately start spending it. It’s not difficult to comprehend why this is incredibly dangerous to do.

Stay Close to Sales

You know your product inside and out. In the early days, you probably made sure to oversee your sales department. But as startup growth begins accumulating and new hires start rolling in, it’s easy and natural to start distancing yourself from sales.

Always keep an eye on your sales department. Sales are what keep your business alive. You don’t need to “helicopter” your sales, but don’t let it get away from you.

Be Ready to Adapt

You need to be able to walk away. If you have a product or service that you think is awesome, but just isn’t working, let it go. Don’t get hung up on an idea and try forcing it to work. Modify and adapt to success.

Choose the Right People

Many business owners have a habit of dealing out titles to people that are close friends or family members. This is fine if they know what they’re doing. But, you don’t want your startup growth to suffer because your friend doesn’t have good managerial skills. As mentioned earlier, find the right person for the job, especially when we’re talking about management and other executive positions.

The Top 5 Reasons a Start Up Company Won’t Take Off

As we have mentioned in the past, there’s nothing more exhilarating than successfully beginning and running a start up company. Many try while only a few succeed. Identify and avoid this handful of reasons a start up company might go belly up.

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Growing with Demand

A start up company struggling to grow with demand is a good problem to have. It means that your company is keeping busy and can’t keep up with a number of customers you currently have.

“Too much” growth can be great because you obviously aren’t hurting for prospects. However, it can hurt you if you fail to get your operations up to speed quickly. If you lag too far behind, this will negatively affect your new start up. There are a few measures you can take to help you with this issue.

First, make sure your business plan has business growth taken into consideration. Have your strategy laid out beforehand, so you know exactly what to do when customers start pouring in.

Also, watch trends and see if any surges in demand are imminent. If you have a pool installing business, you can bank on more spring and summer clients calling in.

Finding new customers

Not having customers your start up company desperately needs is not a good problem to have. You can’t just start up in some industrial park and expect people to know who you are. You need to get your product or service in people’s faces.

If you didn’t start up with a sound marketing plan, start now. Time spent marketing smartly will pay you back. Get on social media and have friends on those networks help you spread your message. Social media can be a great source of free advertising in this way.

Alternatively, several social networks have options for paid advertising. Create your ad, set a budget and launch your campaign. Paid advertising goes beyond what your network of friends might be able to accomplish, for not a lot of money.

Too Much Capital Too Early

A common mistake that can strike any start up company is getting too big of an investment early on. It’s convenient to have a substantial bankroll to get things moving, but more times than not, it leads to some poor decisions.

Not only do you give up decision-making power when you have more investments in your company, it puts pressure on you and your business to perform. If you can start with a lean model requiring less investment you’re forced to make smart moves.

Building a Cohesive Team

Finding employees isn’t that difficult. Finding good employees that enjoy working together is an entirely different beast. You can have the best person for the job in each department, but if each department can’t stand each other the machine of business will grind to a halt.

It’s much more valuable for a start up company to have a great team, not just exemplary lone wolves. It’s also important to find people that can grow into and understand your company. Hold on to people that ‘get’ your start up company and work well with others.

Receiving Payment

Keeping your cashflow positive sounds like a no-brainer. But, a common pitfall for businesses is to concentrate more on getting new customers. Accounting just isn’t as fun.

It’s paramount to your companies survival that you stay on top of your invoicing. Having negative cash flow will sink your business very quickly. Getting hands-off with your accounting is a great way to make sure you’re staying ahead. There are great, affordable accounting solutions available. This will allow you to focus on the more taxing parts of your company; not having to wear the accountant hat as well.

Watch out for these common mistakes and know how to deal with them and your start up company will be that much more prepared!

Bootstrap Funding vs. Crowdsourcing vs. Venture Capital

When you’re starting up, you have several options for funding your new company. The model of your business may be a deciding factor on what kind of funding you should pursue.

You may also want to look at your model, to see if it can be optimized in any way to make your need for funding lower. What type of financing is best for your company?

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Venture Capital

One of the most tempting forms of funding is venture capital funding. If you, your team and your fund sources extremely confident in your business model this may be the way to go. The main advantage of this is the possibility of getting a sizeable amount of money to fund your ideas. Investors can be aggressive, especially when they have faith in your business plan and the research behind it.

You also will most likely be getting your funding from people who have high experience and expertise in the business world. Your investors will probably be very willing to give you advice and direction, so they’re not losing money on you. You also have a high probability of making powerful connections by being in close proximity to successful business people.

These advantages come at a cost though. As investors pour money into your startup, chances are they will want to be more involved in the business. You might need to take the backseat in operations, especially if investors approach and pass the 50% stake threshold. You could potentially even be giving up actual ownership of the company.

Before pursuing venture capital funding, ask yourself some of these questions.

  • Are you OK with giving up some control of the company?
  • Would you be OK with losing ownership of your business?
  • Does your venture capital firm have good connections?
  • Can you take direction from people outside your team?

Crowdsourcing

Crowdsourcing business funding has gained a lot of popularity over the past decade. The model is simple, show the world your idea and ask for capital in exchange for benefits to people funding you once the ball is rolling.

There are several different platforms one can use when in pursuit of crowdsourcing your capital injection. Kickstarter and Indiegogo are two very popular platforms startups can look at. These are rewards-based crowdsourcing models, offering investors perks and benefits for investing in you.

Projects on these sites (and others) will also have two additional options. The first is, “all-or-nothing,” this sets a deadline for you to reach your goal. If you fail to reach your goal in time, you lose it all and your investors get refunded. The other option is to keep what you raise. In this case, you’ll keep the raised funds.

One of the advantages of crowdsourcing money for your startup is you won’t need to worry about giving up any control of your business. You also have the possibility of your message being spread by investor’s social media accounts. Comments sections on pages can be used to receive feedback that you can take or leave.

This model, however, does require a significant amount of time designing and managing your web page that’s hosting your call for funding. With crowdsourcing, you do also run a slightly higher chance of having your idea stolen. Idea theft comes with the territory of finding funding in general, but, with crowdsourcing, your idea has a dedicated web page with a video for the world to see.

Bootstrap Funding

The two previous options depend on finding other people to fund your idea. Bootstrap funding requires more time looking at your model and applying cost optimization. When using this, you will be seeking and receiving minimal outside sourcing of funds, if any at all.

Bootstrap funding is an inherently more grass-roots approach. When looking at your expenses, if it requires more money than what you have coming in, you need to trim that expense or remove it altogether.

The bootstrap model does mean you may have less money to work with in the beginning stages of your startup. Mistakes will also be more detrimental because your dollars need to be working at maximum efficiency.

However, when using the bootstrap funding model, you are in total control of your business. There will have no unwanted outside influence, no changes to your company that you don’t want. You also get to have far more control of money coming in; you don’t won’t be cashing out to investors.

Startup Horror Stories

For every great idea that manifests on the internet, there are a lot of failures. Below is a list of some of the most notable flops throughout the history of the internet. From the 1990s to now the companies listed below showcase the overly ambitious and the simply poorly planned.

Pets.com

There are several reasons this early dotcom failed. First (as many of the companies experienced in this list), they came to the scene before the creation of adequate infrastructure. Cloud computing didn’t exist, which translates to needing to own a server farm and hire a huge IT staff. Running an online store wasn’t nearly as easy as it is today. Today, we have a variety of options for managing inventory and taking orders. Best of all, today’s solutions scale very easily.

A bad sign is when your company loses $147million in the first nine months, as Pets.com did. Needless to say, their choice of running an ad in the Super Bowl did not help anything.

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After losing over $300million, Pets.com finally died for good in November 2000, letting go about 300 employees.

Geocities.com

Launched in 1994, Geocities was the company that defined the look of an awful “90s” website. These sites usually featured loud colors, repeating pattern backgrounds and an onslaught of animated gifs. The internet lost somewhere around 38 million user-built websites when the service officially shut down in 2009.

For reasons beyond the comprehension of most, this service is still alive in Japan.

Go.com

Disney is responsible for creating some of the most magical and amazing things around. This website was not one of these creations. Go.com launched in 1998 by Disney to compete with sites and services like Yahoo and AOL. It filtered out adult material while giving quick links to ABC, ESPN and used the Infoseek search engine.

Disney officially shut down the Go.com project in 2001. Evidence of its existence lives on though, the site itself still hosts Disney related links. You can also find go.com shoved into various URLs of Disney’s. After taking a $790million loss, it appears Disney still wants to get some mileage out of the name.

Blippy

The idea – automatically Tweet every purchase you make online. It’s hard to imagine anyone wanting their shopping habits broadcasted. Somehow, Blippy managed to raise nearly $13million but just couldn’t find mass adoption. After several attempts and a private beta launch, the idea died.

Blippy as a brand lives on while the company figures out it’s new (and hopefully more successful) direction.

Beenz

Beenz suffered from a combination of being far ahead of its time and being a bit half-baked. This company set out to be an online currency, only useable at online retailers. Even though they raised $100million, there just wasn’t much demand or use for this idea between 1998 and 2002.

Albeit nowhere near as sophisticated, on the surface, this early creation does look eerily similar to the (arguably) incredibly successful Bitcoin. At the time of this writing, one Bitcoin holds the worth of over $2800.

Washboard

Washboard is almost too easy to criticize. Yes, people are willing to pay a premium for convenience. No, most people do not want to pay $15 for $10 in quarters (or $26 for $20 in quarters). Even if those quarters are shipped straight to your door, ready for that trip to the laundromat.

It’s not hard to picture the reasons this company never got to a customer count in the triple digits. How it maintained a single digit customer base before it’s demise is equally difficult to imagine.

Pixelon

In 1998 a convicted white-collar criminal under an assumed name claimed to had built a system to deliver high-quality video online. After sinking $16million into getting exclusive performances from huge names in the entertainment industry, the creator was discovered to be a fraud.

The technology pitched was proven to be insufficient. Evidence also arose that it was nothing but an embezzlement machine built for the founder.

Webvan

Today, throw a rock and you’ll hit someone who buys at least some groceries online. This is possible because of the systems and infrastructure available to us here in 2017. The technological landscape, however, was very different in 1996 when Webvan launched. As you may have guessed, Webvan set out to deliver groceries purchased online, to your door.

Unfortunately, Webvan was never able to expand beyond ten market cities. The company lost a whopping $800million when it went bankrupt in 2001. In 2009 it would be resurrected via acquisition by Amazon.

CueCat

CueCat was a handheld, cat-shaped barcode scanner that connected to PCs. The idea was, a consumer could scan barcodes and automatically go to websites with related information. A strange and mostly useless precursor to modern day readers of QR codes.