Surviving your first year as a startup
As a startup, your first year can be a bit of a whirlwind. We should know, because BrighterBox is turning one in November! Nine out of ten startups fail in their first year, so in order to be in that 10% that makes it you need to be on a course focussed on survival. It’s tough going and involves very little sleep, but it’s achievable as long as you believe in your business and your team. The BrighterBox founder, Charlie, has learnt a lot in this first year and is happy to share some insights into how to stay sane while running a business. Here are some tips and advice to help you through the hardest part of the journey and come out (albeit slightly battered) the other end.
1. Surround yourself with talent
Build your team carefully, handpicking the best employees you can find. These guys are going to be the ones that support you when the going gets tough so it is definitely in your best interests to have the crème de la crème. One CEO said he always aimed to be the ‘dumbest guy in the room’, hiring people that he perceived to be smarter and more experienced than him. He knew there was no point being surrounded by people that simply followed his orders and never challenged his ideas. Having people that will push you and push the business is the only thing that will take it to the next level.
More than that, make sure that the team feels valued and that everyone personally wants the business to succeed. Find ways to boost the team regularly so that it isn’t only you that wants the business to climb higher – it’s everyone. It would be impossible to do it on your own, so don’t forget to let everyone share in any successes as well as failures along the way.
Charlie: When you work in recruitment, people seem to think it’s easy to find talent for your own company. Unfortunately, this isn’t true! The startup world has a lot of amazing companies with VC backing and glamorous offices, which is very attractive to candidates. Finding someone who is the right fit for a very small company like ours is tricky, as they have to be happy working in a close-knit team (as well as having the right skills for the job). We should add that it’s best not to panic if you don’t get hiring right the first time, because it may take a few goes.
2. Keep costs down
Burning through money seems to be what startups do best. It can be intoxicating when you raise capital, but don’t get too trigger happy with the credit card. Many startups believe in the mantra of ‘spend money to make money’ which can be true, but only to a certain extent. If you raise a first round of venture capital, then the likelihood is that you will need to reach a few crucial milestones in order to get the next round. Running out of money and then coming up against objections for a second round of funding can leave a startup in a critical position.
If you want longevity for your startup then save where you can and do it with a shoestring budget. Logically you are likely to last longer if you spend less in the first few months, at least until you begin cultivating enough revenue to cover some costs.
Charlie: We found that almost everything is negotiable (even the small stuff). Another thing that we learnt through our own mistakes is to always try a product or service out before you buy it. Avoid committing to lengthy contracts unless you are absolutely sure that it is vital, have tested it out and found it undeniably useful to the business. If subscription companies won’t budge on price, they may be more flexible on contract length.
3. Focus on the big picture
Go into your business thinking in the long term. There is no point trying to skip a few chapters to get to the exciting bit – you need to be prepared to buckle down and persevere before you see measurable success. Only those that have an understanding of zooming out and viewing everything with a balanced eye will be able to make decisions that might have benefits in the future.
A well-defined strategy is what will put your startup in that top 10% and, while quality definitely does count for a lot, getting lost in minute detail can be the road to ruin. Combat this by becoming an expert in delegation. Leave the detail to employees that you have hired for that purpose and allow yourself the freedom of overseeing, rather than attempting to micro-manage, every part of the business.
Charlie: It can be so easy to get caught up in all of the day to day stuff and slip into ‘Hero Mode’. We always found it useful to take a step back at regular intervals (every week, every month) and spend some time either congratulating successes or working out where things weren’t going to plan. This then gives us space and perspective in order to form targets for the future.
4. Plan for disaster
Many startups focus entirely on reaching the next goal that will take them closer to success. This is a great mind-set to have and it does lead to productivity and growth, but what happens when disaster strikes? It can come out of nowhere, and it won’t wait for you to reach a comfortable level of financial security before it does, either. A key part of getting through your first year is about preparing for the worst and being ready in case it hits. Sure, it might never happen, but if it does then you want to be patting yourself on the back for great forward thinking, rather than crying in a corner.
Charlie: Be conservative in estimating revenue during your first year (particularly pertinent if you’re self-funding). Don’t spend everything just because it’s in the bank – leave enough in there to cushion any unexpected twists and turns.
5. Ask for help when you need it
A lot of entrepreneurs seem to feel as though there is weakness in seeking help or advice from others. This simply isn’t true, and can even be detrimental to your company, so if you have that mind-set then get rid of it now. It’s great to be confident in your product or services, but being able to pinpoint where your weaknesses lie and look for ways to improve on them is a strength in itself. No one expects you to know everything, and it would be a mistake to assume you do, so seeking appropriate help from internal or external sources is a vital part of the process for a startup throughout every stage of the journey. Remember that burnout is a real thing and is highly likely to happen to anyone that tries to do too much.
Charlie: If you are lucky enough to come across more experienced people in the industry who offer their expertise, then don’t be afraid to take up their offers for help. Sending a follow-up email asking to pick their brain at a future date can be exceptionally useful. Also, once you begin building relationships with clients don’t hesitate to ask for recommendations and testimonials in order to demonstrate the value of your services to future clients.
6. Schedule in downtime
Speaking of burnout, don’t forget to ensure that everybody is looking after themselves. There is a culture of high performance in startups, which can lead to both amazing businesses and exhausted employees. Making a point of encouraging everyone to take some downtime and keeping an eye out for over-workers is just as important as keeping tabs on productivity. That goes for everyone up to the CEO (ok holidays for the founder might take a backseat in the first year, but working every weekend isn’t advisable). Creating an environment of genuine care towards the whole team is vital for a positive team that will go on to produce great products and services consistently.
Charlie: Set a good example to your team rather than creating a pressure culture. At BrighterBox we like to make sure we schedule regular team lunches, whether that’s a casual market-stall curry in the park or an actual sit down meal, to get fresh air and a change of scene. Friday afternoons at the pub are another good way of getting the team together over something other than work so that (hopefully) no one feels like coming in every day is a chore.
7. Believe in success
Ok, we might have just told you at the beginning of this article that 90% of startups fail within their first year, but just forget about that. There is no point going into the startup game expecting to fail – why bother? You need to believe in success to breed success so just look forward, not down.
Charlie: Trust us, if we can do it, then so can you. We’re not the gambling-types – our riskiest play pre-BrighterBox was when we lost a combined £5 on a virtual reality horserace trying to double our money to be able to afford lunch. If you’re going to bet on anything, back yourself to succeed – it’s the only time the odds are genuinely in your favour.