Starting a new business and growing it bigger is the dream of everyone. But, it is also a cruel truth that one-third of the new businesses don’t make it past the two-year mark. The study conducted by the Small Business Administration in the US also indicates the same. So, it is important to understand the reasons why startups fail and what are the startup rules for surviving the first two years, which means the startup life of your business.
First-year is usually the most exciting one. Setting up the business, finding a team, trying with your ideas, creating your website, mobile app, social media presence, marketing to attract new customers, etc., is all the work that the entrepreneurs do in the first year. But, the second year of the startup business is when you need to see traction and growth. Actually, it is the period that exposes businesses/startups that are not working, the way they ought to be.
So technically, it’s about solid foundations: your infrastructure, team, offering, market conditions, and most of all your customers, if everything is in place by the second year in your business your chances of survival are better than those that don’t have these in place.
Keeping in mind the above, here are ten rules for surviving those crucial first two years of your startup life.
Create a Healthy Work Environment
The first thing that is to be done is to create a healthy work environment for everyone. Your work environment influences your overall functions. Our offices are our professional homes hence the environment of the office should be healthy and family-like.
The new generation wants to work in offices having a great work culture. The high attrition rate in the organizations is the outcome of poor work culture. In this, there are a lot of factors like office hours, location, organizational hierarchy, entertainment, compensation, etc. So, think through all of that and build a good and healthy work environment for your startup.
Though there are a lot of startups that begin from the kitchen tables, or bedrooms of the founders, when you go out to hire people to work with you to bring your idea to reality and market it then you need to create a really good and healthy work environment. This will help you retain your employees who share your vision and believe in your idea.
Maintain Your Work-life Balance
You could really immerse yourself in the work and haste to bring your idea to market, but you need to take care of your work-life balance as well. The rule is simple: “don’t get burned out at work.” The signs of getting burned out at work are feeling exhausted, detachment from the world, feeling helpless, getting sick a lot, sleeplessness, changing eating habits, etc.
Clearly, it impacts both you, your family, friends, relationships, and the company as a whole. According to many pieces of research conducted in the last couple of years, it is clearly evident that working excessive hours damages productivity in the long term.
This applies to both you and your staff. You surely don’t want an unproductive workforce. Or do you? So make sure that you get the work-life balance right. Get enough rest, keep in touch with your family, friends, and people who matter to you. Exercise and meditate to keep your body and mind working perfectly. Encourage the same to your staff.
Hire Right People
A company is made by the people who work in it. So, your company is only as good as the people who work in it. The hard cost of bad hirings is around 200% of the first-year salary, and not to mention the soft cost that could be even higher. So, if you end up hiring the wrong kind of employees, the survival of your startup is questionable at its best.
Hard cost is in terms of financial cost whereas the soft cost is when your workforce loses confidence in the leadership, employee morale issues, and surely destabilization of the entire workforce. Though it is not always that you intentionally make wrong hiring,, if you have made some then take corrective measures as early as you can.
Learn the art of interviewing and do not hesitate in doing second or third rounds of interviews if required. Do check the references thoroughly and make sure you are fully confident in hiring that person. If you have doubts it’s better you don’t take any such risks.
Build Great Work Processes
You cannot work efficiently without creating a good workflow. There certainly would be some problems and challenges and how you deal with them depends on the processes you adopt for your business and act accordingly.
Processes for everything i.e,, people, technologies, machines, facilities, knowledge, information, clients, marketing, supply chains, people management, vendor management, etc. If you make a clearly defined and good process you will find it easy to run your business. Without good processes and workflow management, you and your business might lose direction. Once derailed it is really very hard to put everything back on track. So give it a good thought.
Build Good Products and Deliver Best Services
Businesses that make good products, and offer the best services are the ones that customers love and are sustainable. So, it is important to understand that your business has to start with the right product and services.
You can sell bad products for sure using good marketing for some time, but in the long run, that doesn’t work and you have to commit to building great products from the very beginning so that you can run your company for a long time.
Innovation is the key to the survival of companies and especially the startups and their startup life. Keep innovating and keep delighting your customers. That way you will be able to run your company for a long time.
Protect Your Company
It is very crucial to protect your company that could go upside down by data theft, data loss, legal suite, bad advertising, etc. Make sure you have taken measures to protect your data like the product details, client’s information, customer’s information, login credentials for your emails, and digital assets like social media accounts, websites, applications, accounts, etc.
According to a report around 40% of businesses that experience data loss ends up closing for good. Also, make sure to patent your products, register your company, trademark your logo, secure your website domain, and make your contracts and agreements legal. A company that survives the first two years is not just doing something right – it’s probably doing many things right.
Focus on Your Customers
Identify who your customers are and create your marketing campaigns accordingly. Once you have created your customer persona right and created your marketing and advertising according to that you would be able to not only save your money on customer acquisition costs but also attract the right customers for your business.
Startups lose their vision, their focus. It is important to be focused on what you set out to do, when you’re a small early-stage company do not try to do too many things. Always keep in mind that a business runs on customers and customers alone. People lose focus of the fact that customers are the real reality, not valuation, not investment, not technology. It is an important aspect of your startup life, don’t ignore it.
Getting Funded & Sharing Company Shares
Every startup needs funding for its operations and scaling up. Some entrepreneurs use their savings and pool money from their friends and family. But, that is very limited, and to get more cash you need to get VCs on board to get your funding. VCs usually take stakes in your business against which they invest their money in your business. But, if you are raising Venture Capital make sure you still keep the majority of shares of your company after giving your company shares to the VCs.
Keep Track of Your Expenses
It is utterly important to keep track of your expenses and spend on things that are really crucial otherwise rent if you can. These days you can get furniture, equipment, offices, and other things on rent. That’s easy to get and you end up spending less on these things and keep your money for better things. Once you have established your business you can acquire assets like buildings and fancy furniture. But, don’t do that when you are a startup as it may impact your startup life.
Establish Good Brand Positioning through Good Marketing
Even if you have great products and you don’t market them well your startup might meet the fate of the 90% of startups that close their doors in the first two years. Today is the age of Digital Marketing and being active on social media is important. Make sure your brand is built right and your brand positioning is correct. If you do this right you will surely survive the first two years of your startup business without any problems. And after that, you will only be scaling your business and acquiring more and more customers year on year.
If you don’t have experience in Digital Marketing and Branding you can hire an agency that can do that for you while you can focus on other important aspects of your business.
Conclusion
So let’s end this discussion on a lighter note: it’s crucial and natural to stay excited about your ideas and make sure your business is something you really enjoy doing. Just keep in mind the important points we mentioned in this post so that your startup life is great and you manage to make your startup survive and thrive for the first two years.
