Two months ago, we asked the CEOs of some successful start-up companies what their most valuable experience was. And we’ve got so many great answers that all of them didn’t fit into our recent start-up CEO advice article. So, we decided to publish the rest of the precious insights from them in the second part of our CEO advice series.
Like in the previous part, all the recommendations are divided into major bundles for you to find the information you need right now. Without further ado, let’s give the word to our experts and find out how to save your start-up these days.
Funding & Investments
Some business waste is normal and expected
My #1 tip for startup founders is to be willing to spend money to move forward. In the past, I took a very frugal and scrappy approach to business. I thought that if I could spend 10 hours doing something for $20 instead of $50 I was making a wise business decision. While you may need to be cautious with early expenses, there is also immense value in just making decisions and moving forward. I learned to accept that some waste is normal and expected and that as long as you are overall moving in the right direction then it works out in the end. For example, maybe you try a few marketing campaigns, and on one of them you “waste” a few hundred on ads — if one of the other campaigns generates continued leads and interest in your business, then you are still ahead of where you were.
Targeting and funding = startup super powers
The biggest challenge I faced as an African-American business owner is the knowledge of startup capital and leveraging different funding sources to fuel my business. According to Fundera, 44% of Black business owners use their own cash to fund their businesses. I did not want to rob my household to fund my business, so I had to get the help I needed to learn about funding and the importance of having a solid plan to utilize funding.
In addition to getting a solid education around funding, my biggest suggestion would be studying your target audience and being laser-focused on their needs. At the end of the day, people want to know how you can help them. No matter how great your product is, think about how you can serve your audience and learn to tell your brand story in a diverse way so that it speaks to a variety of interested parties. There could be 3 top reasons the market needs your product, but each reason could resonate differently across your target audience.
Use Slicing Pie model to share your equity wisely
The conservation of cash is a critical part of surviving the bootstrap stage of any startup. Equity is often used instead of cash, but most founding teams make mistakes that can have devastating consequences for the company. This is because most people base their equity splits on predictions about future events including promises from individual contributors and financial projections.
A better approach is to think of a startup as a gamble. When people contribute and are not paid a fair market rate the unpaid amounts are essential "bets" on the future success of the business. The betting continues until the company has enough money from revenue or investment to pay people. At this point, a person's share of the equity is based on a person's share of the bets. This approach, known as the Slicing Pie model, is based on easily observable events and it guarantees fair equity split among founders and allows them to use equity, instead of cash, to grow their company.
Set clear goals
Some people like to say “throw caution to the wind and jump in”. I disagree. When it comes to starting a business you need to be as cautious as possible. Set clear, definable, and achievable goals before you jump in. Without goals, your business will lose all sense of direction and eventually tank. When your goals are clear you can work hard towards your specific objectives and build your business up as you go. The goals must encompass a wide variety of places, such as financial, customer target, brand persona, and expectations.
Set manageable sales goals
The first thing I think about when I build a new product is how to obtain my first paying customer. It's a watershed moment: I now have a product that I can sell! For me, the next goal is to hit $1000 in monthly recurring revenue. It's probably a negative omen if it looks like you'll need more than four months to generate $1000 in monthly recurring revenue. If you achieve $1000 MRR quickly, on the other hand, you have a little breathing room to enhance the product. Alternatively, you can work on something else if you see a better opportunity. This is what happened to me, and the new product I launched reached $12k MRR in less than 5 months.
Marketing & Product testing
Test your product early to ensure the best market-fit
Product-market fit is the most critical aspect of building a successful company. It is the key reason technology companies are able to produce revenue and grow. In order to achieve the fit, my advice would be to find a few customers in related industries and offer to build the first version of the product on a consulting basis.
By offering a reduced hourly rate in exchange for retaining the rights to resell the product to other companies both sides will benefit. The customer will get an almost custom-developed application and you'll gain direct insight into key features and functions for a useful application. By working closely with a few customers, you will intimately understand the key features and functions needed for the user to be successful using the new product.
This approach is far superior to trying to imagine what customers need, spending countless months and years building the product only to engage with prospects and find out that you subtly misunderstood key aspects of their business.
Find the market before investing in the product
You have to confirm that there is a market for what you are selling. This sounds overly simple, but most people waste years building a product that no one wants. Find the simplest, cheapest version of what you want to sell, and then go try and sell it! The feedback you get from this initial process is invaluable as an entrepreneur.
Create MVP and test it on the market
The key for any early-stage startup is to test the market before you spend any money. Come up with an MVP and introduce it through focus groups, a live test run of a product offering, or by offering the MVP for free to early adopters. Then you need to listen to the feedback and make changes or pivot if necessary. Most entrepreneurs do it backward – they spend money to build a great product, and sometimes they end up with a product that no one wants. Often, they keep trying anyway instead of taking steps to pivot.
Pitching & Feedback
Enter Pitch Competitions
If you are an entrepreneur who wants to talk clearly and succinctly in front of a group about your company model and value proposition, this is the most effective exercise for you. During pitch events, you can receive free advice and expert feedback from successful entrepreneurs and investors; you can win money and/or complimentary services; and you can network with other attendees, which might also lead to introductions and opportunities for new hires, attorneys, seed funding, and other opportunities.
Give high value to feedback and act on it
I am sure most startup founders go through this horrible ordeal where they shed blood, sweat, and tears on a groundbreaking idea but receive less-than-stellar feedback. THat’s the situation you want to avoid. Before you take your business off the ground, look for as much feedback as you can. Hear what others would do differently; get as many different points of view as you can.
The more critique you receive, the more aware you become of potential problems with your idea and the quicker you can act on them. It’s a great idea to conduct focus groups, interviews, and surveys to understand what others say about your products and services.
Dedication & Mindset
Pressure makes diamonds.
Businesses, especially start-ups, have a strange way of throwing curveballs at you constantly. Stay resilient - every business encounters hurdles—some are small, like agreeing on a tagline; others astronomical, like figuring out how to pivot your offering during a global pandemic. But getting over each hurdle makes every future hurdle easier to overcome. Don’t fear the unease - you’ll come out stronger on the other side.
Get and maintain discipline
My best recommendation for starting a business on a shoestring budget is to become and maintain discipline. My suggestion to company owners who believe they would become disciplined after getting started and facing a lack of funds is to not get started yet. First and foremost, you must be fiscally disciplined. Then you concentrate on preserving your self-control and recognizing that the business is more vital than your usual lattes, meals out, or jet ski rides. Perhaps those international vacations will have to be postponed for a time. The more you can deprive yourself of immediate material pleasure, the higher your chances of getting your business off the ground will be. Keep it in mind if you want to stay disciplined.
Make your hands filthy
Bring your sleeves up! One of our mentors is constantly emphasizing the need of having leaders who are both "head cook" and "bottle washer." In a startup, no job is too minor or insignificant.
If you begin in this manner, you will gain a thorough understanding of how your company functions from the bottom up as it grows. Additionally, this sends a message to your staff that they should look outside their job obligations, be comfortable performing jobs below or beyond their pay grade, and pitch in whenever and wherever assistance is required.
Growth-oriented business model
Your product must be researched thoroughly well beforehand, as to what the nature of the business one is setting out to establish is. By this, I mean asking oneself whether the business model is scalable or not. Is it going to bode well in terms of growth? How much realistic chance lies in the notion that you can continue idea generation in the future in this business model? What are the prospects for expansion? If prior planning and contemplation suggest to you that it is possible to expand the scale of operations in the future, It would be wise to invest in such an idea. However, a business model seldom proves to be sustainable if there are not many opportunities to scale it with the passage of time.
Akveo’s advice & assistance
Take this powerful guidance and let your start-up fly! With that, you will avoid any invisible traps on your way to success and make it without much hustle.
If you’d like to get personalized advice, book a free meeting with our start-up project development expert.
Akveo’s prime specialization is software development, so we can move from words right into building your digital start-up product. We help start-ups develop their MVP, get investments, and scale their software products to enterprise-level apps for more than 7 years. Akveo offers inclusive start-up software development services with web/mobile app creation, BA, QA, UI/UX design, branding, and project management. With us, you can dedicate more time to your idea shaping and business development while our savvy and seasoned professionals take care of the tech side of your project.
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