If there was a single formula for business startup success, everyone would be a self-made millionaire. Unfortunately, there’s not. However, savvy entrepreneurs navigate the waters by applying tested frameworks and leveraging philosophies which have been proven effective. In doing so, they’re able to analyze the effectiveness and profitability of any given situation and then choose the right path based upon their preferences and the needs of the startup. We’ll go over a few of these methodologies you can apply as you build your own roadmap to success.
1. Cultivate a Company Philosophy and Mission
Do: Work you’re excited about. Many new entrepreneurs get so caught up in running the business and taking care of the daily grind that they lose sight of what inspired them to begin their company to start with. Start with a career you genuinely love and build a company philosophy and mission around what you want to accomplish.
Don’t: Forget to circle back and verify your decisions are in line with your values. You literally make hundreds of decisions as a business owner, to the point they become reflexive. Each time you make a big decision, consider how it contributes to the philosophy and mission you set. It’s also a good idea to make time each day to reflect on the decisions you make, and analyze how they fit in with your values.
2. Build a Strong Network
Do: Work with people who share your values. In the business world, you may have investors, support staff, vendors, ambassadors and more. These people will be critical to your initial success, so it’s imperative they’re on the same page as you.
Don’t: Work with everyone. It can be tempting to hire family or bring someone onto your team simply because they’re supposedly “the best” at something. Examine the fit before bringing anyone into the fold.
3. Leverage Technology
Do: Automate whenever possible to save cash or improve service. Automation frees you and your team from repetitive and time-consuming tasks. All sorts of things can be automated, from billing through payroll.
Don’t: Use paper or spend an arm and a leg. Cloud tech eliminates stacks of paperwork and enables you to access important information wherever you are. As you adopt new tech like cloud and automation services, explore the cost and the savings, so your money goes further.
4. Protect Yourself and Your Startup
Do: Consult with an attorney regarding the various types of business entities you can form to decide which is right for you. The nature of your business and the people involved will all play into the decision as to whether you should operate as a sole proprietorship, limited liability company or a corporation. The wrong choice can be costly, or open you and your business up to litigation. Speak with a lawyer who specializes in the field as you launch to ensure you’re set up with the right structure.
Don’t: Be afraid to bring in experts to cover the areas you aren’t strong in or are stretched too thin to cover effectively. Lawyers are only one group of professionals who can help. Accountants, bookkeepers, tax specialists, and others may be beneficial, too.
5. Be Number-Savvy
Do: Set a budget. It probably goes without saying, but if you don’t set a budget to start with, you might as well just be leaving stacks of cash everywhere you go. It’s impossible to grow if you don’t know where your money’s going.
Don’t: Spend money set aside for things like taxes. Part of your budgeting should include payments toward taxes or setting aside cash for them. Uncle Sam is not the most patient or forgiving, which means you’ll be in a serious bind if you can’t pay up when you need to.
6. Track Your Numbers
Do: Make bookkeeping a regular priority. Money is tight for most startups, yet business owners often have a stack of receipts they plan to enter “tomorrow,” cash in multiple places, or a trail that’s difficult to follow. When this happens, it’s impossible to evaluate the fiscal health of the business or know what money is available to spend. You could purchase more inventory and not have money for payroll or pay your recurring bills and not have any working capital.
Don’t: Fail to plan ahead. Chances are money will always be tight during the startup phase. It’s planning ahead that will save you. Use last year’s data or perform market research to determine if there are seasonal lulls, and then set aside the cash to cover them. It’s also advantageous to research funding methods in advance, even if you don’t expect to leverage them. Know beforehand if you’ll qualify for loans, establish lines of credit, and look into options like factoring companies to increase cash flow and have funding in your back pocket when you need it.
7. Set Goals
Do: Use the SMART method for setting goals. It’s generally broken down into the following components: Specific, Measurable, Attainable, Relevant, and Timely.
Don’t: Forget to track performance. Setting goals is only half the picture. You must follow up with your goals on a regular basis to see if you’re meeting your objectives and what progress you’ve made. Dedicate time at least once per week to go over your goal checklist and make notes for the coming week about what steps you should be taking to achieve your objectives.
8. Be Ready to Pivot
Do: Keep an open mind. Regularly poll your employees and customers to get a pulse on your business. Positive feedback is great and reassuring, but negative feedback and ideas for improvement will tell you more about the areas you need to address in order to grow.
Don’t: Be afraid to change things up. The needs of your startup will change as it grows. Market conditions will influence sales. Trends will impact consumer behavior. New technology and better ideas will come along. Although it’s not wise to jump on each new trend that emerges, be flexible in your approach and embrace potential changes which can benefit the business, you and your team.
9. Strive for the Best
Do: Negotiate. Just about everything is negotiable. Explore your options for better terms with vendors, clients and your team.
Don’t: Accept a “no” at face value. While it’s important to be mindful of boundaries, a “no” can sometimes mean you haven’t found the right approach to get a “yes” yet. For example, if you’re asking a vendor for longer payment terms and are declined, change up the approach.
The end goal may just be to have more working capital. Will the vendor cut you a discount if you pay early or pay in cash? Are there other vendors who can fulfill your needs? If so, does your current vendor know how easily you could switch, and that you’ve stayed out of loyalty? A similar approach works with finance, too. For example, the bank may tell you “no” when you ask for a loan. It’s quite common for startups to get denied. That doesn’t mean you can’t improve your cash flow situation, but you may have more luck with options like invoice factoring.
10. Look Out for Yourself
Do: Track your time and give yourself a paycheck. According to a recent survey published on Business News Daily, 51 percent of business owners have foregone a paycheck to support the needs of the business. A quarter went six months or more without getting paid. This can lead to stress and eventually burnout. Even if you can only give yourself a modest salary, do so. Nobody will ever work as hard for your company as you, and you need to be taken care of or you will not be able to take care of your business.
Don’t: Overlook the needs of your supporters. Employees, vendors, customers and any others who support your business need to be taken care of, too. Coming up short for payroll or making vendor payments late can destroy relationships, which will eventually erode your business. You spend time building up your network. Don’t forget to maintain it.
Get a Free Factoring Guide
Whether you’re concerned about cash flow now or want to have a solution ready for future lulls, a factoring company can help and may be your best bet. To learn more about how it works and if it’s right for your startup, download our free factoring guide.