New business start-ups present the entrepreneur with one of the most daunting tasks he or she will face in a lifetime. At least 50% of companies fail within the first 5 years, making the start-up effort a risky investment for both your time and finances. Depending on how substantial the financial overhead it, the time investment can be even more overwhelming than the monetary investment in certain circumstances. There are also massive insurance risks if you do not have substantial funds to pay for health plans and other types of coverage. One small mistake, or even an unfortunate streak of bad luck such as a car breaking down coupled with an unexpected hospital visit, can be devastating to the success of your new business—because let’s face it—most entrepreneurs go into business to make money, not because they already have enough.
To make your start-up story a successful one, you really have to “go all-in from” the beginning. Otherwise, you can run the risk of lacking the appearance of legitimacy through the typical indications of amateurish business conduct such as an obvious shortage of full time employees and a deficiency in overall dedication towards making day-to-day improvements. The real issue is that most of the time, a person or group of individuals will try to start a company while in school or while still holding their safe, full-time job that guarantees benefits. In reality, however, all of the day’s 24 hours still don’t provide enough time for the start-up entrepreneur to comfortably complete all of his or her tasks.
It’s no secret that keeping costs low is one of the most important aspects of a start-up. The decision between ordering new business cards and buying a new printer may not be the “make-or-break” investment for your company down the line, but when you have a 4 digit bank account and are looking to grow your new business, these decisions matter more than you think. Holding off on purchasing things that are unnecessary is a smart move when you are working with low capital. As a general rule, if you don’t need to use it for a few months, it would be smart to not buy it for a few months, unless you are presented with a bargain that could save you some cash down the line. Having extra capital is essential when there are variable costs that are impossible to predict.
When’s the right time to buck-up and get an office rather than working out of your house? This decision depends on many factors: to name a few, you’ll have to consider how far along your company is at the moment, how many employees you have, and what kind of company you have opened. If you are looking to bring on new employees, getting an office may be the smart move if you can find one cheap enough to fulfill your needs. Legitimizing your business so that a new employee really feels that he or she is part of a real business shows that you’ve placed value not only in your company, but your employees themselves. It sets a standard for them as well as for you. Moreover, many businesses fail because they lack the self-discipline; expecting new employees to arrive on-time each morning and to make things happen on their own can be a tall order without a boss actively nudging them along, so make your new office one in which everyone meets each morning to keep everyone accountable and professional.
Selecting the right employees when you are trying to expand your startup are also some of, if not the most difficult decisions you will make. You might find someone that is particularly skilled at what they do, but if they lack dedication, it could be better to bring someone aboard who is more motivated but less experienced. Age is also a large factor. Bringing someone on that is old may help with experience, but younger prospects struggling to prove themselves could offer the better choices because they are eager to work hard and will often do so for less money. An older employee may have family to attend to, whereas a younger employee is likely to be able to devote more of his or her cumulative energy to the growing business.
Building a motivated team is not easy, and finding someone willing to take a pay cut or equity that may not pay off for months or even a few years is difficult. If someone is not willing to take such a risk, it’s probably worth your time to find someone with the entrepreneurial who will. Starting a company is synonymous with risk-taking, and in the efforts early stages, this is inevitably an expectation of both the employer and the employees. So, don’t get discouraged if you are having trouble bringing on new employees with low capital, because it may take time to find the properly-motivated individual who is willing to take the entrepreneurial risk of joining a startup. Remember that it is worth waiting to find the right individual rather than settling for someone that is not willing to “go all-in.”
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Your advice on start-ups was just what I needed as I search for the right team to get my concept off the ground! Though I am an older entrepreneur, I have struggled with finding partners willing to fully commit to the long-term due to the short-term hardship of our current weak monetization. After reading your blog, I have decided to look for young talent that is unafraid of eating mac’n cheese for a while!