How to Handle the New Startup Slump

So you’re working on a startup. You’ve found a few good team members, caught the attention of at least one potential investor, and are getting ready to get your first product out the door. As hard as this work is, it’s actually the honeymoon period of your business: the halcyon time in which possibilities are endless and anything can happen.

After the honeymoon period, of course, comes the slump. Maybe you launched your product, but the initial interest wasn’t quite as big as you had hoped. Maybe you had an amazingly successful launch, but now sales have plateaued or dropped off completely. Maybe you didn’t make it to the front page of the iTunes App Store, didn’t get that review in Ars Technica, didn’t get that second round of funding.

Or maybe you did all of that, and you’re still slumping. It’s bound to happen at some point: what goes up must come down, and the initial high of a new startup is always replaced by a slump at some point. If you’re currently in the slump, here are a few things to do to ride it through and begin your upward trajectory again.

Rest
When did you last take a vacation? How about your team members? Americans in particular are notorious for skipping vacations, especially in startup culture where long hours and full commitment are paramount.

However, burnout is real, and it is one of the key causes of that slumpy feeling. By going away for a while, you allow your mind to open up to new experiences and stop running in the same old ruts. To quote startup CEO Justin Moore, a long holiday “allowed me to clearly see the answers to two important business decisions for 2012 that I had struggled with prior to taking a break.”

Money
Is your slump money-related? Instead of looking at a bunch of endless possibilities and funding options, are you staring at dried-up funding sources and a bunch of unpaid bills? This kind of money trouble is enough to drain the morale of even the most exciting startup.

The truth is that money trouble is less related to the quality of your product than it is to the way your business manages its finances. A lot of startup owners jump in and assume they’ll know how to handle their own accounting, but they end up causing themselves a lot of financial stress instead.

It’s time to outsource, even if you think you can’t afford it. A good accounts receivable financing team will help you bring money into your business, streamline your cash flow, and make sure you are free to focus on your strengths instead of trying to solve your business’s financial problems.

The Second Launch
For your first product launch, anything seemed possible. Now that you’re approaching a second product launch, you have a better idea of what works and what doesn’t. You have a more realistic estimation of how much your second product will make. You also know exactly how much grunt work is involved in successfully taking your product to market. This makes a second product launch seem less like an exciting endeavor and more like a chore.

How do you solve this type of slump? First, you celebrate your small wins. Did you clean up your stockroom so you can stack new inventory? Find some way to reward yourself.

Secondly, you rally your team. Every startup has its drudge periods, but with the right people around you, you can bring excitement back into even the most mundane tasks. As Lefty at My Life, Starting Up writes: “This is the one reason why I’d never do a startup without passionate people.”

So? Are you ready to get yourself out of the slump? Maybe book that vacation, or hire your new accounting team? If you have other tips for startup owners and new entrepreneurs, leave them in the comments.

Why Young Entrepreneurs Should Know A Thing Or Two About Marketing

The global fiscal meltdown of ’08 translated into an important lesson American consumers. While financial insecurity became rampant, the need for self-employment and entrepreneurship was highlighted. The event also sprouted the need to be proactive and to pursue business ventures as somewhat of a necessity.

5 years later, the idea to individually sell product/service is easy enough to bring forth like before, but it is the marketing imperative that is turning out to be the limited factor. It’s one of the major pitfalls startups are laced with. However, there are ways to overcome this limitation in the long run.

Cutting out the loopholes
In the initial stage, a startup goes through a roller coaster ride and this is the period where most of the marketing loopholes need to be identified. This is why young entrepreneurs should develop the ability to think preemptively for the first six months or so.

The loopholes in the initial phase will be defined by the stakes. For instance, startups that rely on online revenue are considered to be the stakeholders on the internet. The biggest liability of this stake is security - both physical and network. It is quite important because most modern startups are connected online in one way or another.

Internet protection for businesses is an essential asset for any small company. This issue has also become even more relevant lately due to concerns about data security for startups engaged in providing consumer cloud services.

Focusing on such loopholes can curtail to the marketing success of the company. For example, businesses with a secure network and user base can advertise themselves as the ‘most secure consumer company’ or ‘a company that cares for consumer privacy’.

Understanding external dynamics
Regardless of the nature of the product/service, it should reach the customer/target market in the most convenient way. A common mistake made by owners of young businesses is that when they bring a tech-savvy idea to the industry, they only think about marketing it to the tech-savvy populace. Most of them miss out on the bigger picture - their idea of reaching success should have room to allow for simplification and massive reach.

For instance, Therma HEXX is a young entrepreneurial venture which has really kicked off not only because of its innovation, but how they simplified the use of their products. The startup has literally reinvented the way of heating and cooling rooms. They simplified the technology so that it can be easily used by anyone without having to be ‘tech specific’.

Barriers faced by budding entrepreneurs
Essentially there are two types of barriers that budding entrepreneurs can face. The ‘internal’ aspect is defined by characteristics such as confidence, self-worth and motivation. The ‘external’ category mostly deals with influences, group dynamics, experience, technology, education, time and resources.

It is the second category that is more defining in terms of affecting the outcome of a young entrepreneur’s venture. It also means that the social behavior of young business owners have a crucial role to play in venture marketing success.

While the presence of inexperience can be natural, entrepreneurs can quickly improve under practical circumstances. Doing so would also cut down the costs of marketing consultancy firms and PR companies.

The initial business phase is the most important, so getting a grip on how marketing works will help entrepreneurs to gain revenue and come up with sound strategies in collaboration with the rest of the staff.

7 Staffing Tips for Startups

The kind of staff a startup chooses to support its organization will be critical to success in the early game. Startups have limited cash, which means hiring decisions are often made by executives instead of human resources. The job ad and interview process are crucial to the hiring process. Before you begin the hunt for the perfect candidate, consider the means of the business and the role of the person.

Hire vs. Contract
The core functions of your business are duties you want carried out in-house. These are people you need face time with, like developers and systems administrators. This is why companies hire for UI/UX positions and outsource the actual coding of the system to others. There are skilled coding positions that are done in-house, but these are usually management-level positions. Contract out low-level tasks that require little skill. Empower project managers to hire their own work force remotely and hold meetings to check the progress of those tasks and make suggestions on removing roadblocks along the way.

Facility Costs
When you’re relocating, or even if you’re settled, the upkeep of your facility takes time and energy. Small duties like taking out the trash or making coffee can be shared among the office, but ordering supplies is a bit more involved. There are intern positions that can help with this, but you should consider a person to manage resources as your company scales. You can designate an office manager and hand those responsibilities to that person.

Allow Devices
Allowing employees to bring their own devices to work lowers the cost of your hardware, but it can cause a need for IT staff. You can contract positions out while you grow familiar with candidates by posting engineering staffing job openings with recruitment firms. This saves you the time of sorting through applications and leads to more qualified candidates. These firms often prep you ahead of time, with information about the candidate. Once you’ve hired a candidate, you can work out a more permanent contract with the employee and handle most IT concerns in-house.

Hire Slowly
Remember to hire for your most critical positions first. It’s easier to explain to investors that you didn’t meet a goal because you were understaffed than overstaffed. Make a list of the duties you can’t do yourself and start small. For individuals, use contractors to augment the work you’re already doing. Once you have a viable product, scale with a partner and your first few hires. This gives you time to refine your pitch and practice the important beats. Once you have a working product supported by a small staff, you’re ready to get more funding and do some hiring.

Hire for Cost
Everyone wants the best, but talent is expensive. Remember that you need to work within your means as you launch, replacing your group with better people as your business scales. Be sure that you reward your ground floor employees with positions that fit their performance, but hire people you can afford until you can show that your product will grow and make money.

Network for Hires
The best hires are people you meet through others. These are contacts that may know your fellow professionals and can offer some recommendations for people you should work with. If you don’t have the money to pay a staffing firm to qualify hires for you, and most startups don’t, you need a more efficient way to meet people. Job fairs also get you some face time with employees, and provide an outlet for branding.

Budget Time
The most valuable asset you have is your time. As important as hiring can be, you can only sacrifice so much time toward finding the right candidate. Delegate as much of these duties as possible to your administrative staff, and leave the review process to you or someone equally technical.

Why Studying the Liberal Arts Can Help Your Business

If you want to be an entrepreneur, what are the most important classes you can take? Business classes, right? Think again. While a background in marketing, research and development, finance, and promotion is all essential to helping your small business get off the ground, the truth is that you can learn much of that information on the job or by hiring consultants to help you set up a LLC or design a webpage with a sticky sales funnel.

However, you can’t outsource an education in the liberal arts. If you don’t take the time to study history, literature, art, and philosophy, you won’t have a foundation upon which to build your business. As the saying goes: if we do not study history, we are doomed to repeat it. But if you do take the time to study the liberal arts, you develop an enormous cultural understanding from which you can create something completely fresh and new.

Here are just two examples of how the liberal arts can influence your business:

Philosophy
Why are we here? What is the meaning of life? What does it mean to live a good life? These and the other big philosophical questions have been around since the dawn of humanity, and form the basis of nearly all religions and belief systems. Taking the time to seriously think about these questions, and understand exactly what they’re asking, helps your small business in three ways.

First, these questions help you determine what you want out of life. Maybe for you, living a good life means donating proceeds to charity, or hiring under-served populations, or increasing educational outreach. Maybe it means always having enough to provide for your family.

Second, these questions help you decide how you want to run your business. If your vision of a good life includes love and friendship, you don’t want to create a business where you and your employees are forced to work 80-hour weeks. If you view humans as stewards of the Earth, you’ll want to create a sustainable business that does not take too much from the environment.

Lastly, these questions help you develop your product. Understanding what other people want out of life helps you create something that adds to their existence and does not detract from it. A product created by a philosophical thinker does not include excess packaging or unbreakable clamshells. It is beautiful, functional, and useful.

Fine Arts
If you look up the history of famous logos, you’ll quickly learn that the McDonalds logo, for example, uses red and yellow because these colors “subconsciously trigger hunger and/or induce excitement.” This is the sort of basic knowledge that’ll have you telling some poor graphic designer to make your logo green because it’s the color of money.

If you take the time to study the fine arts, however, you begin to get a greater understanding of how color, line, shape, texture, and perspective all work together to create an unforgettable image. Spend a semester studying the world’s great painters, and you’ll never say “let’s make it the color of money” again. Instead, you’ll be able to work with a designer to create something that truly reflects your organization’s mission and purpose.

You’ll also be able to bring that sense of artwork into your product design. Steve Jobs, of course, famously used his knowledge of calligraphy to give us Macintosh typefaces. What will your fine arts education produce?

If you don’t yet have a solid background in the liberal arts, it is time to start taking some classes. As Gwynedd Mercy University notes: students who study the liberal arts “deepen their base of knowledge, critical thinking and communication skills” and are “distinguished by professional competence as well as a deeper understanding of social responsibility and their place in the world.”

It’s hard to think of a better foundation for a budding entrepreneur.