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Business Plan, Starting A Business

The Startup Tips That Will Keep Your Business Going

Startup Tips

Every business has its challenges. The ones who are able to overcome the challenges become the stuff of legend.

For example, three years after starting, Fred Smith, the founder of FedEx, used the company’s last $5,000 to win $32,000 at the casino. The win allowed FedEx to pay their employees that week until they signed a contract to keep the business rolling.

While you do not have to gamble your business away, running a startup can be challenging. That is why we want to discuss 10 startup tips that reveal the things you need to do to avoid failure so you can have your own famous startup story one day just like like Fred Smith.

10 Essential Ingredients to Avoid Startup Failure 

Ingredient #1: Have a Minimum Viable Product in Less than Six Months

Your startup needs to start making money sooner rather than later. This requires simplicity. Jonathan Wegener, the founder of TimeHop and ExitStrategy stated, “Building a product is like packing a suitcase: Plan out what you think you need. Then remove half.”

Ingredient #2: Keep Learning

To paraphrase the famous line from Glengarry Glen Ross, you have to understand that starting a company requires constant vigilance and a persistence to keep learning new skills.

You do not always have the luxury to hire a book keeper for your taxes or a project manager to keep tabs on your clients. Instead, you need to learn how to do this. Successful entrepreneurs are active readers and learners who work to understand all facets of their business.

Ingredient #3: Cash Flow is King

If you don’t have cash coming in to cover your expenses, you don’t have a business. You have a hobby.

While a lot of tech companies covet venture financing for building their company, many need to focus on bringing in revenue as well for long-term viability.

According to recent research, 90 percent of tech startups fail. Typically, the majority of them fail in the first 120 days. That’s why Y Combinator founder Paul Graham stated, “If you can just avoid dying, you get rich.”

Twitter and Blogger founder Evan Williams laid off every employee of Blogger before it was sold to Google for an estimated $20-$50 million dollars.

Ingredient #4: To Fund or Not to Fund. That is the Question!

Have you ever noticed on Shark Tank that they ask you about your previous successes? None of the companies were created two hours before the show started. Instead, they operated for six to 12 months driving initial sales. That way they can prove to the Sharks that their product has a fighting chance. How can you prove that your product deserves funding?

Ingredient #5: Have the Right Team

Speaking of laying people off, you need to have the right team around you to succeed in most cases. According to recent interviews, nine out of 10 startups say their biggest challenge is attracting top talent. This starts with the entrepreneurs themselves. Many new tech startups have 20-year-old CEO’s running the show. They might have an amazing vision, but at that age, they often do not have the experience to run the day-to-day management of a company.

Remember, Google hired Eric Schmidt and Twitter hired Dick Costolo to give Larry Page and Jack Dorsey time to grow into their respective CEO roles. Who do you have on your team?

Ingredient #6: Patience is a Necessity

One of the biggest challenges businesses have is that they assume they will go viral. The idea is sort of like praying that you win the lottery over the weekend. One of the biggest challenges companies have is assuming creating content means it will suddenly go viral and they will have a nice tidy sum in the bank by the following day.

While that could happen, it is just as possible that I pick up the winning lottery ticket in a gutter while walking down the street.

More likely, you will grow like Twitter did at the beginning. The pre-launch for Twitter was March 2006. They opened the doors to the public in July 2006. Eight months later, on November 7, 2006, they hit 1,000 users.

Ingredient #7: Spend Your Fundraising Time Wisely

Funding your business requires you to be smart. With all the ideas floating around the world today, you need to stand out.

One of the best ways to do that is to not only chase investors, but also their investees. Talk to successful startups who were funded by VCs. If you can get your story out to them, then sometimes they go to bat for your business with their investors. That makes it easier to get in to do your pitch.

Ingredient #8: Understand Your Market

It sounds simple, but you need to make sure that you create a product that your potential customers need. Do not just create a product because it is cool. Make sure it serves a purpose for your market.

Ask your customers what they want or need for their business. The more you know, the more you can help your customers.

Ingredient #9: Single Founders Rarely Succeed

Look at all the biggest companies in the world. How many of them were started by one person? The truth will probably shock you.

Starting a business can be challenging and you need someone who can weather the storms with you, as well as fill in your weak spots in business. The best partners are those who complement each other’s skills.

Take Steve Jobs and Steve Wozniak. Jobs was a masterful salesman, while Wozniak was a brilliant programmer and engineer. Together they were able to do more than either could do on their own.

Ingredient #10: Fail Forward Fast

World famous hypnotist and motivational speaker Marshall Sylver has a line called Fail Forward Fast. It means that you will make mistakes, but at the same time you need to focus on how to move past them. That is why we included this at the end. When you make mistakes, you can’t dwell on them. That can be even more disastrous than the initial mistake.

Final Thoughts

In the end, all startups make mistakes. However, knowing these 10 startup tips as well as how to avoid some of those mistakes can be vital for your long-term success in business.

As one of my middle school teachers once told me, you learn more from your mistakes than you ever do from your successes. Let us know what mistake was the greatest teaching tool for your business in the comment section below.

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Kabbage Team

Kabbage is here not only to provide access to the small business funding you need, but to also help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at content@kabbage.com.