2020 has been a big year for the start-up industry in Australia.
The Australian Bureau of Statistics reported more than 340,000 new business entries in Australia between 2019-20, and KPMG reported startup investment rising despite COVID. Generally, companies take two different routes when kicking off a new business – seeking external investment or bootstrapping.
I chose the latter for the first six years and self-funded my company from the ground up, scaling and growing off earned profits alone.
As an entrepreneur, the lessons I learned along the way not only helped me build a self-sufficient organisation, but one that would later be acquired by a Fortune 1000 company.
Here are my takeaways.
The most important investor is the customer
Many startups hyper-focus on funding early, and in the industry, many view the amount of funding received as a measure of success.
While investments can be a helpful tool when growing a business, an important rule to remember is that investors are not just there to support you, but also to generate profits from their investments.
I chose to focus more on the customer from the outset.
Understanding the customer is what truly drives long-term success, and learning how to communicate effectively with them is critical for sustained growth.
- Strong customer relationships are built on established lines of communication and continual feedback, all happening throughout a company’s development. To achieve this, it’s essential to reach out to your customers regularly and provide them with a community to grow and learn together. Understanding their needs, thoughts, and even concerns or frustrations will lay the foundation for solid customer relationships, company innovation, and sustained future growth.
Every hire makes a difference, now and in the future
When building any company, the quality of the people brought on in the early stages of the business will have a significant impact; each hire will influence a startup’s success and future.
When looking to hire, it’s important to select employees not just based on skills but also the attitude, passion, and values of each candidate.
It’s difficult to find talent these days, but investing extra effort in recruiting people with the right mindset who might be a good cultural fit will add value as your business grows and evolves.
- When I look at candidates, I choose to prioritise proactive, results-driven people who are willing to learn and collaborate across the company no matter their position. Especially when selecting potential leaders, managers, and executives for your company, a collaborative ethos is essential. Leaders need to be able to step up, solve problems, and help drive success, whether it’s brainstorming or executing business strategy.
- A willingness to learn is also essential. Start-ups grow and evolve quickly, and therefore employees must be willing to adapt, change, and learn. Start-ups that don’t foster and encourage continual learning and collaboration ultimately place themselves at a disadvantage. In the end, it’s the right people with the right mindset that build successful companies.
- Once you have a strong foundational workforce, I’ve found that investing in in-house recruiting and company events fosters a similar mindset and culture early on and contributes to the long-term quality of hires.
Size as a competitive advantage
As a small company, start-ups can focus on the little details or opportunities that lead to the biggest outcomes and better position themselves in changing environments. Size is the biggest advantage start-ups have over larger competitors. Companies that recognise this advantage put themselves in a proactive position to seize opportunities more quickly than companies that simply react to market changes after they happen.
- It’s critical to encourage this agile thinking within a start-up early, both culturally and within business processes, to be able to respond to market changes quickly and leverage competitive advantages larger competitors are too slow to secure.
- Another important factor is to focus on differentiation, not playing ‘catch-up’. As a new business, no one will ‘out-Microsoft Microsoft’, and playing catch-up is a mistake many start-ups make. Don’t compete on the same services as large companies. Bring something new to your customers that will add value in a unique way.
- Finally, as a start-up grows, it’s important to recognise opportunities big and small. Larger companies will not be interested in what they see as smaller opportunities, but if you see that as something that will grow into a much bigger category, you have several years head start on the big companies. Seizing small opportunities allows for differentiation, and is essential in the early stages. Focusing on the details early can pay off in the end, establishing a start-up as a future leader in the space or an attractive acquisition by larger players.
Focus on the fundamentals
When looking to bootstrap your company, success comes from focusing on the fundamentals – your customers, your people, and your competitive advantages. While each is important, when combined into a single approach, it will help you guide your start-up as you grow.
Your customers will support you, your staff will drive your growth, and leveraging your size, unique service, and opportunities will naturally lead you to success.