Five for Friday: Golden rules of startup survival
One of London’s most successful recent startups, Revolut, found itself in the headlines for all the wrong reasons last month.
The British fintech ‘unicorn’ came under scrutiny after stories were published alleging a ’toxic’ culture within the business including at any cost sales tactics, forcing job applicants to work for free, excessively long work days and high staff churn.
Revolut, which is in the process of applying for a UK banking licence, insisted it’s addressed the issues and it’s a much nicer place to work now. Well, let’s hope so, eh.
So we thought it might be worth reminding us all - and yes, that includes you, Revolut - of some of the basic rules of survival as a startup, once you’ve had that brilliant idea to change the world with a new product…
Look after your people
It sounds super obvious, but your employees are key to your success and you need to treat them nice. Richard Branson once said that employess were even more important than customers, because they are the breathing embodiment of your brand.
The Virgin boss believes that: “If the person who works at your company is 100% proud of the job they're doing, if you give them the tools to do a good job, they're proud of the brand, if they were looked after, if they're treated well, then they're gonna be smiling, they're gonna be happy and therefore the customer will have a nice experience.”, he told Inc. magazine.
Treat them badly and they will send the customer packing and leave shareholders out of pocket and angry.
We’ve all seen and heard about founding bosses at famous startups who ultimately got booted out when their behaviour became too much of a distraction once other peoples’ investment was tied up.
So be nice to your staff.
It’s amazing how some companies can forget that treating customers poorly and ignoring their please for help can do untold damage to a yet to be established brand.
US customer service group touch support says that for a startup business, the customer experience presents “an obtainable opportunity to elevate your brand, and impress clients while you are establishing your position in the marketplace”.
In short, the customer IS the marketplace and even just one poor customer experience could limit the growth of your great new idea.
Ensuring a consistently good experience for customers has never been more important. In the age of online reviews, social media and instant news, this kind of behaviour can cost any company - startup or established - dear.
There are loads of tech related startups these days, but having a robust technology infrastructure driving your startup is also very important. IT has become so intrinsic to business operations that it is now a boardroom-level consideration for most companies.
Whether your startup is aimed at consumers or the business-to-business sector, your technology needs to work and work well. Your staff need a robust IT infrastructure to perform at optimal levels and your customers need access to a clean, fast and reliable digital window to your business to make their buying decisions.
Entrepreneur.com notes that competitive businesses are actively investing in things like big data, analytics platforms, artificial intelligence, blockchain and other technologies to deliver great customer experiences.
“Choosing to ignore the latest of these technologies may quickly make your business obscure and irrelevant as you are no longer delivering what the customers want”, the entrepreneurial website said.
Recent history is littered with once promising brands that fell off the precipice because they failed to keep up with the times - MySpace, Netscape, eToys, were among them.
Any startup needs access to funding in order to get the idea off the ground, so you need to plan how and when you’re likely to need to think about raising capital for your business.
The UK government’s startup site, InnovateUK, says it’s important to “know your funding stage’.
InnovateUK says that “[u]nderstanding where you are in the funding cycle is essential if you’re going to raise appropriate finance”. It adds that your ability to engage investors will determine how far your start-up will go.
It lists up to six different stages in the funding cycle:
- concept stage
- early stage
- later stage
- initial public offering (IPO)
In each funding stage, the company receives money that focuses on specific growth points.
But this doesn’t mean you should just run about trying to shore up as much funding as you can just for the sake of it. Equity crowdfunding site Seedrs says that you should try to “achieve all that you reasonably can without money before you look to raise investment, anywhere”.
There’s one good reason for this. “Investors will want to see that you are truly committed to your business, and that you have the key entrepreneurial talent of creating something out of nothing. So if your business is no more than an idea, it’s probably best that you try to reach and exceed as many milestones as you can with it before you look to raise investment”, Seedrs advises.
According to consultancy firm EY, “the balance of power is tipping away from large corporations toward agile start-ups”.
This, they say, is because start-ups often deploy new digital technologies to level the playing field with industry incumbents who are weighed down by their age old infrastructures and processes.
This shouldn’t be underestimated, because a start-up’s ability to change direction, improve product or address a sudden new customer trend is based on the lack of boardroom meetings, hierarchical approval systems and an in-built desire to grow and beat the system. This is what a disruptor lives for.
This is in fact a win-win for any startup. Young businesses want to grow and be seen and recognised by the big players whose carefully nurtured markets they are trying to break into. Big business, says EY, is waking up to this and instead of battling small disruptors, they are instead reaching out to them to find ways to partner with them and even buying them out altogether.