We see it frequently. A can-do person with a great idea who just can’t quite get the financials of their startup to work. While every story is different, we have seen some common traps that we would like to help you avoid! Many thanks to the hundreds of entrepreneurs we’ve spoken with for sharing their experiences.
1) Follow the scent of the customer! – the first question that must be answered is
‘Are people willing to pay for my product or service?’ We’ve said it before and
we’ll say it again, lack of customer validation is the number 1 reason that startups
fail.
2) Positive cash flow is the primary goal – determine how much you can personally invest to make your venture successful and start there. If you can’t show a return on investment for your own money, why would any investor want to give you theirs? Cash is king!
3) Don’t go all in too soon – we often state that focus as the key to getting things
done. However, some entrepreneurs take that a step too far by quitting their jobs
and assuming things will work out over time. Once you have positive, sustainable
cash flow that can support you and your family THEN it’s time to leave that safe,
stable corporate job. Not before.
4) A funding miracle is probably not around the corner – One small business owner stated: “I was always waiting for something more substantial to happen and then go for funding. If you can’t ‘self-fund’ (see points 2 and 3 above) then you need to spend time selling your product AND fundraising.
If you’re starting something, learn from the financial lessons of those who have gone before you...or risk learning the hard way!
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