There have been startups as long as there has been business. But only recently has the idea of the “startup” taken on the meaning it has in today’s tech-saturated economy.
Today, when we think of startups, we think of cash-flush twentysomethings developing the next mobile app or social media platform with millions of dollars of other people’s money. This new startup world brings with it immense opportunities, and large pitfalls, for today’s entrepreneurs. Here are five ways to make sure your startup turns into a successful company and does not fold after the last of the VC cash dries up.
Choose your team wisely. When we think of startup successes, we think of individuals — Mark Zuckerberg, Jack Dorsey and Larry Page. But startup success is truly a team effort. Choose your team wisely. Pick team members that fill the gaps in your own resume. And pull together a team that can cover all aspects of business — finance, creative, marketing. If you become known as the next Mark Zuckerberg, it will be because of your talent in team-building as much as your programming ability.
Don’t overspend. The current tech startup culture glorifies the big-spending, VC-backed tech entrepreneur. But spending heavily during a startup period where you have no revenue coming through the door is a recipe for failure. Keeping control over your expenses will make your startup capital stretch further, allowing you to focus your money on the core of your business — product development.
Don’t be a one-hit wonder. You may have a world-changing product idea that you know is going to be successful. But once you get your first product off the ground, you have to continue thinking about product development. Apple didn’t stop with the Macintosh or the iPod or the iPhone. Google didn’t stop with a search engine. Focus on your first product; but know that if you are going to be successful in the long-term, you have to build a company that embraces a culture of innovation and never stops thinking about the next product or service.
Build a business plan, but be flexible. A business plan is integral to your success. You need to know your target consumer and study your competitors. But especially in the fast-changing world of technology, you need to be flexible and aware of the changes in the marketplace. Build a business plan but continue to refine it and adapt it to changes in the marketplace. Add to it as you learn more about your industry, your consumer and your technology.
Don’t bank on an acquisition. There seem to be a large number of startups whose business plans could be stated in one sentence: “Get acquired by (insert name of large technology company here).” While acquisition is clearly one exit strategy for tech startups, putting all of your eggs in that basket limits your options. Startups should build their companies with the end goal of making it a viable company on its own. Have the discipline to build a company that can be monetized. Do that and you will be even more attractive as an acquisition, and will also have the option of standing on your own two feet as well.