To help celebrate Disrupts first birthday, we have summarised the challenges that a one year old startup most commonly faces and the questions that founders will have to tackle. Let us know whether you agree with this list….
Is my business concept working?
If your business is going to be successful in the long term, it has to be profitable. That’s easy to understand but if you are still in the development stage, it’s a very different situation. There are no sales metrics to determine whether the business is heading in the right direction and at the right pace.
However, that’s no reason to ignore this question. The sooner you can understand out how well the business’ concept is resonating with users and potential users, the sooner you can improve the offering.
If you’re seeking investment, obtaining evidence to validate the business proposition is even more crucial, as would-be investors will want you to demonstrate that you have a user base that is willing to pay (directly or indirectly) and growing at a sufficiently fast speed.
How do I attract and keep staff?
As an early stage business, you probably don’t have the ability to pay highly competitive salaries or offer the “wow” factor that certain household brands (think Apple, Morgan Stanley, etc) provide to excellent job candidates.
The good news is that increasingly job candidates are choosing their future employer based on the non-financial aspects and perks that the role provides. This can range from flexible working hours and free gym membership, to fast track career prospects and employee share options.
For instance, a share option plan for employees, such as the EMI share option scheme is highly tax efficient and flexible, which can help startups compete with the “big guns”.
Numbers- do you get them?
It might sound trivial but the fact is that many business owners don’t understand their financials.
Do you know if you are profitable? Do you know your “burn rate” (i.e. what your net expenditure is each month)? Do you know the value of your business? What are your business’ key performance indicators (or KPIs)? What are you spending your money on?
To turn a business into a successful venture you need to be able to answer these questions, or have someone on your team who can.
Dealing with the “non-core” aspects
After a year it is fairly clear what areas of the business you and your co-founders do well, and not so well. Neglecting areas of the business that feel daunting or hard is never going to be an acceptable arrangement.
Therefore, the sooner you make a collective decision as to how to deal with the other aspects, the better. This may include nominating the manikin in the corner of the room, or (a better option) outsourcing the work to someone that understands this area of the business. They will generally be more proficient, faster and cheaper in the long run.