Mike Tyson once said that everyone has a plan until they get punched in the mouth. Well, this witty remark is probably the closest thing to my own experience of running an actual startup. Validating your idea, making a business plan, drafting a budget, doing market research and raising funds is always necessary. However, once the real struggle begins, the new issues and problems will arise. Now, they say that 90 percent of startups fail within the first five years, yet, the first two years are often regarded as the crucial period. So, here are my personal experiences, as well as my candid advice to your first two years as a startup founder.
Retain your team
One of the things that a lot of startup founders are unaware of is just how dependent they are on their team. There’s a statistic that claims that about 97 percent of all Australian startups employ between 3 and 19 people. The problem with this lies in the fact that if you run a 5-people crew and one of them abandons you, you’ll fall a lot shorter than you would imagine. Another problem lies in the fact that it’s never the least productive employee or the troublemaker that leaves. It’s often your best employee, due to the fact that they’re ambitious and always have other (better options). Try retaining your team and try to create a healthy workplace environment.
Establish a healthy work-life balance
Another thing you need to realize is that you’re not omnipotent and that your workplace capacities aren’t really as great as you may assume them to be. You can’t micromanage everything, and the idea that your business will fall apart if you take some time to spend with your family or friends is just a myth, an illusion of your own making. If this is not an illusion, however, but a fact, that business would be doomed to fail either way. So, establish a healthy work-life balance and take some time for yourself. Burning out from exhaustion and loss of perspective will only speed up the downfall of your enterprise.
Be careful with the downtime
One of the troubles that endangers a lot of startups is the fact that downtime is a direct loss of profit. Sadly, this happens more often than you would like but it’s not really something that you can avoid. If your website is down, people might not be able to reach you, which may result in a massive loss of potential business. Therefore, look for a host that can guarantee you 99.99 percent of uptime. If you’re running a physical workplace (for instance, an office somewhere in Sydney), a power shortage could put a halt to your operations. This is why it’s so important that you have a reliable Sydney electrician on speed dial.
Think about the cash flow
One of the things that a lot of people won’t tell you is the fact that it takes for your business between 6 months and a full 2 years to become self-sustainable. Just because you’re making money (on paper), it doesn’t mean that your income is enough to cover your operational costs, let alone let you break even. It’s beyond doubt that account receivables are the real money; however, it’s the money that you have to wait to collect. On the other hand, your suppliers need to be paid straight away, your landlord will not wait for the rent payment and your staff won’t wait for their salaries (nor should you allow such a thing). Put the cash flow as the top priority of your tasks, and you’ll drastically improve the odds of your business.
Sure, everyone’s experience differs, and there are some industries that bring a specific set of problems of their own. Nonetheless, it is my firm belief that the above-listed four dangers pose a substantial threat that every startup founder should be warned about. This way, you drastically improve your odds of survival.