When should Startups Hit the Accelerator Pedal?
Start-ups are in rage these days. Even college students are trying to occupy this space. Entrepreneurship ideas are priceless, but the failure rate for startups is beyond tolerance. The significant obstacles and unpredictable outcomes during the business acceleration process soak the blood out of most founders. Such is the harvesting season for most startups. Strangely enough, a majority of the startups fail to regulate the accelerator pedal. As a result, they frequently run into problems.
Going full throttle prematurely
All types of business entities would like to seize the moment and go full throttle for the next milestone. However, the urge for premature speed and victory may come at an unacceptable risk. Aggressive spending during the initial stages has been cited as one of the reasons for failure with lots of startups out there. Remember, running out of cash means the end of the road for any business. The key over here is to resist the temptation of overspending and to safeguard cash for important spending. Every expense should be properly scrutinized to avoid financial panic during times of need. One should scale the business operations based on the product and market conditions and not based on hopes and dreams.
Hiring too early
Salaries are a substantial expense so hiring employees right away may not always be a great decision. Testing the market first should be the ideal approach. In fact, one of the recent studies has highlighted the fact that entrepreneurs with slower approach end up with higher profits. Hence, it’s advisable not to take hiring decisions in the heat of a moment. Only once the workload gets to a point where a helping hand is a must, one can consider new faces behind the desk with defined roles and responsibilities. The goal should be to build an ideal team, but in a slow and systematic manner. So, don’t fall for the classic mistake of hiring a lot of people ahead of time.
Seizing the moment
At some stage, the business might pick up, and if there is a viable and scalable way to get a good and quick return on investment, it’s time to scale the operations. To be more precise, every dollar spent should yield more dollars into the company’s balance sheet. At this stage, one can press the accelerator pedal hard, and invest heavily in sales and marketing. The key over here is to recognize when a particular milestone is achieved so that aggressive marketing can be conducted for yet another milestone.
Some founders believe in taking enormous and unnecessary risks. They believe that aggression is the much-needed ingredient for success. The fact of the matter is that the start-up mentality comes with a certain degree of aggression. However, taming and channelizing this aggression in the right direction is a must in today’s business arena. So, don’t get caught up with the aggressive mentality as the track record for startups has been sobering for most of the entrepreneurs out there. As a budding entrepreneur, one must know when to be conservative and when to be aggressive.