If you’ve founded a startup, you likely remember the moment the idea came to you. What follows is an indescribable enthusiasm and anticipation of a smooth sail to an acquisition or IPO.
“I have an amazing idea, what could go wrong?” you ask. Well, as you’ve probably learned, practically everything.
There’s a Darwinian aspect to startups that gets lost in the modern romanticism of the entrepreneur. The facts are these: Getting technology right is hard, execution is harder and scaling is the hardest of all. There’s a reason why the vast majority will ultimately fail.
Maybe you’ve survived the first few years and found a fit for your product or service while learning some valuable lessons along the way. Now you need to take the next step and grow your business. Whether you’re a poli startup or a new consulting firm, here are some things I’ve learned that can help you make the jump.
Beware the fundraising rabbit hole
Now that you’re an established company with customers, it seems reasonable to think that you can go out and raise some money to propel your company through the next growth phase.
While it’s entirely reasonable to think you’ll attract investors, poli startups face a far more difficult path than startups in other industries. Most experienced investors won’t understand your business and will be underwhelmed by the market size.
For a poli startup, fixating on fundraising can become a huge opportunity cost. To be effective, fundraising needs to become a full-time job for the founders. Even after a round of funding has been secured, founders must then continue to manage and build relationships with their investors.
To take the next step with your business, you’ll be far better served to hold off on fundraising and focus instead on business development and growing your network.
Hire slow, fire fast
As a founder of a boot-strapped startup the only thing more precious than time is cash. Underperforming employees will cost you both. If you ask even the most successful entrepreneurs what their biggest mistake was, many will say it was avoiding the inevitable decision of letting someone go.
Take time making your hiring decisions so you’re not put in this position. Be sure the prospect fully embraces the idea of working at a startup or new firm, shares some of your passion and understands the risks involved.
Your first few employees will also have a huge impact on the culture of your company as it grows. One of the best pieces of advice I was given about first hires was to never bring on anyone you wouldn’t want to have a beer with.
Sell your vision to attract the right talent
You wear many hats as a founder, but perhaps the most critical is “head visionary.” Much like a campaign needs to communicate the candidate’s vision to voters, an entrepreneur must exude enthusiasm and sell his or her vision to prospective employees.
Since you likely can’t provide a competitive salary for your first few hires, they need to be convinced that the equity they’ll receive along with the opportunity to be part of something extraordinary is worth the risk.
Say no — a lot
If you’ve achieved a product or service fit, it’s easy to begin to drift into thinking about your next big thing. After all, you’ve already turned an idea into something people pay you for. Your next idea will be even more successful right?
As entrepreneurs, it’s tempting to step out of line to pursue the next bright and shiny object. My advice is don’t do it. Continue to focus and improve on the things you’re already doing well. Until you’ve successfully achieved meaningful scale with your first offering, you’re just simply not done with that offering.
Diversification can make sense if your goal is to build a sustainable and successful lifestyle company. But if your goal to increase the value of your company you’ll need to create a consistently growing stream of recurring revenue. This requires improving and scaling something that’s already working, not starting over with something new.
Remember why you started
Starting a company is an incredibly difficult task requiring a great deal of personal sacrifice. You likely were moved to action by something you feel passionate about. Maybe it was an opportunity to be a thought leader and innovator in a field you care about, or a societal problem you wanted to solve. This sense of purpose will become even more critical as your company evolves.
Despite the progress you’ve made in the first few rocky years, you’ll continue to get knocked down. If you lose sight of the reasons why you started your business in the first place, it’ll become much harder to get back up.
Justin Gargiulo is CEO and founder of VoterTrove.