These 7 vital business decisions set our company on a profitable trajectory from startup success to happy exit.
Early stage business decisions are vital to your startup success. They set you up for growth and reduce the risk that your small business will fail. The Small Business Administration reports that about 20% of businesses will fail within their first year and 40% within their first five years. Those are staggering numbers, especially since you may be putting your life savings into starting a business.
I’ve built several software companies and there are a handful of startup success activities I highly recommend to new entrepreneurs. Taking the initiative to make these 7 business decisions early will drastically improve your chances of building a long lasting company.
1. Obsess Over Startup Success Dashboards
You absolutely must have the pulse of your cash flow and other key performance indicators at all times. In a SaaS (software as a service) business like mine, we used metrics like number of new trials, conversions, active accounts by tier, average overage charges, support tickets, at risk accounts, and much more that provided a high level view of everything you need to know for your success metrics.
2. Monitor Trailing 12 Month Cash Flow
You’ve heard that cash is king. For startup success, monitoring your trailing 12 month cash flow removes seasonality and provides a better indicator of whether you’re growing or shrinking.
To create this metric, add up all of your sales in the last 12 months and put the total in one column of a spreadsheet. Next month, do it again for the trailing 12 months – and so on. If your 12 month totals are not changing, or worse – if they’re decreasing, you’ll know instantly because your curve will be flat or trending downward.
The beauty of the trailing 12 month cash flow bar chart is that it provides an early signal that you need to make changes to create business growth.
3. Build With an Exit In Mind
You don’t know when you’ll sell, but this mindset forced me to create processes so that the company could sustain itself. As you grow, your processes will evolve.
What was once a quick design decision will eventually require a lot more thought and planning to ensure that adding a new feature won’t break another feature. A manual accounting process will need automation. Keep evolving your processes for growth. Your startup success depends on making sure you’re replaceable. That’s right, the value of your company cannot be you. If it is, you are worth less money to a buyer.
4. Hire the Best People You Can Find
Pay them market rates – and if you can’t do that right now, give them extra stock options but get to market rates as fast as you can. The difference between having an A+ player and a B player is 2x or more in productivity. While they may be cheaper to hire, B players cost you more in the long run.
Also, avoid hiring friends. Relationships can sour over business.
5. Shower Your First Customers With Bear Hugs and Love
Be obsessive about customer happiness, especially your first ones. They will become your ambassadors to your next set of customers and will drive growth.
Send them educational videos, tips on using your product, use cases to show them ideas they haven’t thought of. Converse with them as much as you can. Listen more than you talk and don’t let your pride of building a product create a defensive posture if you get critical feedback. More here on creating happy customers: The Happy Customer: 10 Ways to Improve Customer Satisfaction.
6. Show Testimonials With Results On Your Home Page
People buy from those they trust. When you’re new, there’s no easy way for prospects to find out whether they should buy from you. By showing them testimonials from happy clients along with results they achieved, you start to build that trust.
The home page on your website may be your prospect’s first exposure to your brand. Let your customers do the talking for you through case studies and exciting results. Believable testimonials can have a strong impact on your startup success.
7. Create Referral Opportunities to Boost Startup Success
Start ups don’t have big sales teams. Create partnerships with complementary companies or affiliate relationships that turn your customers into an external sales engine. Setting up such programs are easy using software like Referral Candy (affiliate link), which has a free trial to see if it’s a good fit for your business.
Building a business is both challenging and rewarding. It’s sheer panic and exhilaration at the same time. Enjoy the ride!
Author: Raj Khera, Publisher of MoreBusiness.com and Co-founder/CEO of several SaaS companies acquired by public and private firms