Most startups don’t make it. That’s the first thing you need to know before you sink your life’s savings into what you hope will be the next, big thing. Forbes reports:
According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. A whopping 80% crash and burn.
Since being reported a couple of years back, these numbers have been disputed. But whatever the real numbers, the fact remains that a startup being successful, and around for 10 years or more, is the exception rather than the rule. If you hope to beat the odds with your big idea, here are a few tips that should help get you past that 18 month hump:
Don’t Pay for More Phone Service than You Need
Skip the traditional PBX system. For small businesses, a private branch exchange is more trouble than its worth. It will be very difficult for you to justify the expense associated with such a service. Look for hosted PBX services that offer VoIP alternatives for small businesses. In addition to saving money, you can also expect services like:
- Voicemail transcribed as email
- Call recording
- Auto attendant
- Voice combined with screen sharing
- Video calling
You can purchase business phones, or even make your team’s existing cell phones a part of the business setup. The best thing about this type of system is that you have low startup costs. And you can purchase as much or as little service as you need. Your phone system can grow with your business. Don’t start your business as if it were 1999. For business communications, VoIP is the way forward.
Don’t Buy More Office Space than You Need
A classic, rookie mistake is to blow the budget on that lavish office space you’ve always dreamed of. You’ve got the corner office, a window with a view, and a $1,200 a month lease that is draining you dry.
If you can run your business for free out of your parents’ basement, that is exactly what you should do. Foolish pride has no place in a startup. It takes something that youth often lacks: hard-nosed practicality. That usually means delaying gratification for a very long time.
One of those hard-nosed life hacks is shared office space. You are not the only person in your town that needs some office space. You might find a great deal of compatibility (dare I say, synergy), with someone like yourself seeking a money-saving solution. The folks at SYO: Share Your Office seem to think so. Their whole business is based on helping people who need to share a space find each other. That is the kind of practicality that can save you thousands during those first, critical months.
Plan to Make Money from the Start
Don’t pull a Twitter. If your business plan does not have a strategy for making money, you don’t have a business plan. Collecting a bunch of venture capital money, then hoping to sell to some big fish, is not a plan. It’s a gamble, and mostly a long shot. As a startup, your job is not to make friends, or attract a lot of eyeballs. Your only job is to make money. If your business does not make money, it is not a job. It’s a hobby.
Giving away a free service is dishonest. Of course you can draw a crowd by giving away free things. But eventually, you are going to have to monetize that hobby. You are going to have to clutter it with ads, sell user information, start charging, or sell the business to someone else who will figure it out. You either get people to give you money for product, or you’re done.
It is shocking how many companies go under for these, and other avoidable reasons. Make sure yours is not one of them.