5 Points that make or break your startup

There are some entrepreneurs out there who can create amazing things through the extraordinary force of their personality and vision.

Richard Branson is one who seems to be able to create new businesses through the glint in his eyes. But most of us mere mortals cannot do that. We need to focus on the details of the business to make it happen, otherwise it won’t. 

And even Richard Branson acknowledges in his book that he was obsessed with the minutest detail in his early career. He probably still is. Graeme Wood, who funded the Wotif travel booking site (which he sold for a tidy sum to Expedia), told me how he got involved in the most intricate details of the user-interface of their first website. 

If I had my time again with MobileSelect – the mobile plan comparison site I started in 2005 –  I would have spent a lot more time on the development of our applications, systems and the website,. Instead I spent too much time planning, budgeting, reporting, attending board meetings and thinking about “the big picture”.

1.Know what you don’t know 

Looking back, I also know that I was missing some key skills – or, rather, I was relying too much on learning on the job and flying by the seat of my pants. 

Hindsight is a wonderful thing, and I know now that my biggest contribution to the business was the idea itself, as well as selling it to the business partners we relied on to make it happen (the mobile carriers). We lacked skills in some key development areas, and the end result was a product that was a sub-standard service that our website visitors found difficult to use. 

So make sure you know what you need to make it happen, and be absolutely certain to identify your own shortcomings. Nobody is good at everything – not even entrepreneurs… 

2.Act early and decisively – admit mistakes and move on 

Having our “version one” of the online service we offered being less than fantastic wasn’t in itself the end of the world, and it happens more often than not. However, not doing something about it can be a fatal mistake. 

No startup can afford to hesitate before rectifying a mistake. If things don’t work, be it related to the product, the market, your sales process or the people you employ, don’t wait. Don’t expect it to sort itself out. Be decisive. Make changes. You are much better off risking a new mistake than trying to persevere with the one you already made. 

3. Leave perfection to those who can afford it 

Striving for perfection is a luxury accorded only to companies with deep pockets in mature and regulated industries. One of my early business mentors, a Norwegian entrepreneur with several very successful startups behind him, urged me to decide what was “good enough” to do the job – a state typically obtained long before perfection. (Or, as Bill Gates used to say, bug-free software is obsolete!) 

It was good advice then, and it still is. Knowing when to tell your designers, your developers, your project managers and your engineers that today is the day we “go live”, open the doors to the public, start selling and then hope for the best. Finding that balance between being “finished” and being “ready” can make or break a budding startup. 

4.Minimum viable product 

In our fast-changing world being early (albeit not necessarily the first) can also be the difference between success and failure. Apple’s first computer was fairly basic. Backrub’s -first search algorithms were rather rudimentary; they even changed their name shortly after launch, Larry and Sergey somehow thought ‘Google’ has a better ring to it. And who would have thought that a smaller version of Motorola’s infamous brick mobile phone would one day find its way into every pocket? 

Putting your product or service into the hands of real users is when product development takes off. But be prepared to listen, to adjust and change rapidly. More often than not, you’ll have saved a lot of money and resources and end up with a better product – even if it isn’t what you thought it was. 

5.Be prepared – and leave something in the bank 

I used to do a lot of sailing, spending most Saturdays on a yacht on Port Phillip Bay. One of the things you learn going into the wind towards the windward mark, trying to get the boat to travel less distance while maximising speed, is that you have to leave something “in the bank”. Go a bit higher into the wind just in case there is a wind-shift before you get there. 

The margins can be small in sailing, but missing the mark only reduces bragging rights in the bar after the race. Risky, but not terminal for most of us.  

Sailing too close to the wind in business is much more dangerous, not because you may run out of water (cash), but being in shallow water reduces your options when you most need them. 

So make sure you have at least three or four months of negative cash-flow left at any time. Anything less can cost you not just bragging rights, but the key to the bar! 

At Howitt&Co we have seen many examples of startups and early stage companies not pay enough attention to the right details, have a blinkered view of their competencies, not quite understanding what their customers really want and be unprepared. We know what to look for, what questions to ask and can help you with the right tools to make your business a success.