Every new business can expect to encounter a near-death experience during its start-up phase. The problems can stack up until it may seem that there is no end in sight. As the owner of a start-up, how best can you deal with the hard times? We talked to some people whose job it is to help start-ups. – “Be prepared to do a bit of bluffing.”
“I have never come across a start-up which hasn’t had to get by on the skin of its teeth”, says Jos Peeters, CEO of venture capital business Capricorn Venture Partners. With 30 years of experience in venture capital under his belt, Peeters really knows what he’s talking about. “Even the most successful businesses have had moments where they thought they might not pull through.” This is encouraging. Hard times don’t mean the end of the road for start-ups. The following tips will help you to survive.Watch Full Movie Online Streaming Online and Download
1. Don’t let things get out of hand
“Many pitfalls can be avoided if you count every penny”, says Peeters. “If I had to pick one piece of advice it would be: watch your cash flow. When do bills need to be paid? When do you expect to receive money?
Make realistic estimates.
Keep a close eye on it, and deal with it on a weekly rather than monthly basis. Make realistic estimates. It often takes longer than you might expect to receive income from pending contracts or the payment of grants. Meanwhile, salaries and other costs will need to be paid out straight away. If you manage your cash flow efficiently, you won’t find yourself stuck between a rock and a hard place.”
2. Don’t panic
“A struggling business can keep going for a surprisingly long time”, says Peeters. “Don’t panic. Fear is not a good leader, especially when things are going badly. The path to growth is never a smooth one. If things are going well, make sure you keep both feet on the ground, but don’t be pessimistic if it’s going badly.”
3. Stand firm
“For start-ups, the difference between sinking and swimming often hangs on knowing how to close a good deal, even when times are hard”, says Peeters. “When the going gets tough, start-ups are often tempted to sell their product or service at any price. Don’t do that, it will only backfire.
The difference between sinking and swimming often hangs on knowing how to close a good deal.
Instead of selling more, you will sell less, as your customers will smell a rat and lose their trust in you. I always advise start-ups to bluff a little. And here’s a tip for you: take a shower before you visit your clients, then they won’t be able to smell your fear!”
4. Use your network
“Make use of your network”, says Ivan Thijs of Byro, a start-up advisory service which is part of the employers’ association Voka. “People outside of your business can often analyse your problems more clearly and effectively. Start-up founders are often restricted by their own assumptions and may be suffering from tunnel vision.” According to Thijs, founders often look for solutions in the wrong places. “Sometimes we see people panicking because they are finding it hard to bring in customers, and they think the solution is to go on a sales technique course. But it might be far more effective to recruit a great sales person. In this case going on a course is not the answer, they need to seek funds to recruit the right person, or bring in a partner who will take care of the commercial side of the business. The best solution often turns out to be very different from that which you initially anticipated. That’s why you need to have people to bounce ideas off.”
If you have a good network, you will also be able to deal with problems more quickly, according to Evy De Bruyker, who also works for Byro. “That way, you can call someone straight away and seek their opinion. You will find this helps you to reach a solution. If you have to spend time searching for help every time you encounter a problem, you will waste precious time.”
People will appreciate it if you are transparent in your dealings with them, De Bruyker advises. “Make sure everything you agree to, whether it is with your partner or your supplier, is set down on paper, and do this as soon as you have reached an agreement. That way, you will have something to refer back to. When you make these agreements, make sure everyone around you really understands them. This can save you a lot of money later on should you encounter problems.”
Your customers can help you to decide what is worth spending energy and money on.
“Test your ideas out on your customers too, and do it fast”, says Annelies Maes of Byro. “Be flexible, and make changes where necessary. Don’t get stuck in the planning phase for too long. That way you won’t waste too much money. Your customers can help you to decide what is worth spending time, energy and money on, and what is not.”
5. Trust your instincts
“If things are not going well, spend a bit of time on self-reflection”, advises Thijs. “Take a good look at your own values and standards. What made you start a business in the first place? What gave you the motivation, vision and drive to go ahead with it, and is it still in line with what you’re doing now? If not, can you make some adjustments so that it is? In some cases, it is just not possible, and that’s when you have to ask yourself if you are the right person to be doing this.”
According to Thijs, sometimes the best solution is to look for a partner. “For example, if you are a technology expert, your business might desperately need a professional sales organisation. In cases like this, it makes sense to look for a partner who will complement you.”
Just like a marriage, you need to choose a partner who is right for you and who complements you.
There are other advantages to bringing in a partner. “You can carry on doing the things you like and do best”, says Thijs. “It’s not only more enjoyable working in a team, it is also more productive: one plus one equals three! Another advantage is that banks prefer to work with teams rather than with individuals, as it doubles the credibility of your business. But, just like a marriage, you need to choose a partner who is right for you and who complements you. You need to be open to other opinions. You also need to realise that, from now on, you will have to share everything.”
6. Put your baby to bed
Of course, there are times when you have nowhere else to turn. You cannot continue to limp along. “Be brave, and call it a day”, advises Frank Maene, Managing Partner at venture capital fund Volta Ventures. “There are certain circumstances when there’s nothing else for it but to throw in the towel. For example, following the attacks on September 11 2001, and the bankruptcy of Lehman Brothers bank in 2008, when the stock market crashed. Or perhaps your competitors are just better than you, or you can’t get enough funding.”
“Don’t draw out the pain unnecessarily”.
“Don’t draw out the pain unnecessarily”, advises Maene. “If necessary, keep an eye out for partners or competitors who might possibly want to take over your business, and be prepared to sell up to them for peanuts. Worst-case scenario, you will have to shut up shop.”
7. Start again
After the fall, get back on the horse. You will be wiser and stronger. “You learn much more from problems and failures than you do from success”, says Peeters. “In our society, a failure is considered a disgrace. In other countries, with different economic ecosystems, a failure is an essential element on every CV. What’s important is understanding what went wrong. Every honest person deserves a second chance.”
Source: Trends (by Jozef Vangelder, 4/06/2015)