Five Considerations For Entrepreneurs Wanting To Take Their Startups To The Next Level
Startups do not always make it- but most fail for various avoidable reasons. Here are five such considerations to keep in mind.
The UAE's visionary leadership has always been aware and engaged in the significant role of startups in economic diversification and nation building. After all, a thriving startup economy leads to job creation, attracts global talent, and improves the quality of life of citizens. Today, SMEs represent 94% of the total businesses operating in the UAE, and contribute to more than 50% to the country's GDP.
But for various economic reasons, investors tend to focus on startups that are relatively farther into their development journey, have shorter development cycles, or fall within growing segments such as fintech. However, innovation and startups help drive a nation's economy forward as a key engine of economic growth. Thanks to lean startup processes and advances in technology, entrepreneurs are now scaling companies to sizeable revenues with smaller teams and less cash than a few years ago. The cycle of innovation is speeding up, and talented entrepreneurs are ready to take over and invent the next disruptive technologies.
In my work as partner along with KPMG's accounting and finance advisory team, we help startups scale up their businesses with what we know best- accounting and finance select services. We have noticed a few recurring trends in this regard, and we think that startup founders should definitely keep these five key considerations in mind if they want to take their business to the next level:
1. Be consistent While it is always healthy to ideate and get new insights on shaping up a new business, founders should stay laser focused on the purpose of their business. A good product along with a well-executed brand sets the scene for long-term success. The most successful startups craft a brand strategy early on. Investors need to know exactly who the founders are, what they do, and why they are doing it. The "problem" your startup is trying to solve needs be relevant and specific. The best advice for startup founders would be to do a dry run of their investor's pitch to mitigate this issue. Is the pitch clear and concise? Does it leave investors wanting to learn more? Or will they come out of the pitch meeting with ambiguity about the business?
2. Say it with numbers The numbers need to align with the story. While a punch line is important, investors that drill beyond the charisma and get into the figures will need a coherent financial model. In some cases, as the story line of a startup evolves, founders may miss translating that story into numbers, and most importantly, impact. Founders should invest their efforts in presenting financial information, including projected sales and profits, capital requirements, and an exit strategy. In addition to the potential financial returns, venture capitalists (VCs) will be interested in evaluating the founders and the team's ability to execute while creating and sustaining a viable product. While they may appear skeptical as they evaluate the opportunity, VCs will play a critical support role in your company if they decide to invest.
3. Find the right balance Operationalizing a business, i.e. finding the right people and the right tools to bring an idea to life, can sometimes blur initial assumptions that were taken at the beginning to build financial projections and the business model. Startup founders should thus challenge all the assumptions they made at least three times. The first time, they need to be as optimistic as possible. The second time, challenge it through an emotionally detached perspective, then intensely critique it. The third time, the assumptions should be challenged from a middle ground perspective, between optimism and pessimism. The key is to make those projections attainable.
4. Know your value proposition Startup founders should know their selling point, and not shy away from it. As entrepreneurs move along their startup journey, they may find many potential parties interested in what they are offering. Founders may even receive deals they cannot refuse. At such a time, it's critical to understand the "why" and "what" this means. The risk is of being blindsided by a value proposition that a founder may have focused on so much, while the market and consumers see other opportunities. Founders should be attentive to those who approach them, and what they offer. It might unlock great insights, and produce innovative ideas that transform into greater solutions that may have otherwise been overlooked.
5. Focus on branding, networking, and culture A startup needs a face; most likely that of the founder. In the initial stages, founders need to focus more on branding and a narrative. People will need to know the founders, know their story and background, in order for the startup to build credibility. Once established, founders need to activate networking and build relationships. The more you network, the better your chances are to speak to people that will benefit you and your business. As founders carry these two efforts forward, a startup's values become shaped, defining the organization's culture. This is what attracts the right people who are interested and inspired by the company and founders.
Startups do not always make it- but most fail for various avoidable reasons. However, startups are the engines of economic growth. All companies have a business cycle from being a startup to becoming a mature company, and each stage presents its own set of opportunities and challenges. It is important to find advisers that understand what it takes for you to be successful at each stage of your business, whether you're looking to grow, expand internationally, strengthen, or exit your business.