Being a startup owner requires agility. It’s a role where a leader’s challenges are constantly evolving. If aggregating the resources and expertise to get a business off the ground is the first hurdle, surviving the competition and the continually shifting market is the second, third and fourth.
As any entrepreneur will confess, everyone who owns and runs a company has struggled at one time or another.
Dale W. Wood – now a venture capitalist, CEO and founder of Dale Ventures – draws on his experience to share six tips for startup owners to succeed and grow their companies.
An entrepreneur himself, Wood’s Dubai-based, early-stage-focused venture capital firm concentrates on the industries of financial and business services, technology and media, real estate and consumer and retail, all while creating long-term value for entrepreneurs.
In the crowded world of investment, Wood used these tips to carve out his own niche and is now committed to giving his knowledge back to the industry in which he found success.
Don’t be afraid to take risks – or fail
Taking risks is the best part of being a startup owner.
With risk comes failure, but failure can also pave the way to success.
A failed project can teach entrepreneurs just as much as a successful one. The most crucial lesson for business owners from failure is getting back on their feet. Resilience can be a challenging virtue to learn on a bed of roses, but thorns will separate those destined for success from those who quit along the way.
Entrepreneurs should always try to create something new, fresh and innovative by approaching things differently. This level of experimentation can help discover a new, overlooked niche within the company’s market, even if a few ideas fail along the way.
Dale Wood always advises his portfolio companies to experiment, innovate and take risks without letting failure haunt them or their goal of building a successful business.
Hire strategically and mentor your team
Hiring and training comparatively less experienced but motivated resources is a smart strategy, but it can be painstaking for leaders.
Wood says founders should consider hiring younger, less pricey employees with something unique, fresh and innovative to contribute to business outcomes.
Attrition can frustrate many leaders, and talent poaching by the competition is an ongoing challenge. But leaders in startups need to focus on the fact that it only takes a few inspired, committed employees to take a company to the next level.
Loyalty, innovation and a commitment to success aren’t things that companies can buy. Promoting mentorship and a work culture based on ownership may be a more strategic approach than filling up on talent from top-tier companies.
Spend strategically
A high cash burn rate, i.e., the speed at which a company spends its cash reserves, can indicate overspending. Expenses like salaries, rent, research and development or marketing to fund the company’s growth can consume significant cash reserves.
Wood says a high cash burn makes investors and stakeholders nervous. A company with a high spending rate may be at risk of running out of money if it doesn’t generate enough revenue to cover expenses. However, he emphasizes that he leaves it up to the entrepreneur to balance growth and cash reserves.
Company expenses like salaries and rent are invariable, and investing in R&D makes strategic sense, but thoughtful leaders can usually modulate a company’s marketing spend in a sustainable way.
Prioritizing expenses, improving operational efficiencies, and regularly reviewing spending are other ways entrepreneurs can optimize their startup’s cash burn rate.
Leverage social media marketing
Using social media platforms like Facebook, Twitter, Instagram and LinkedIn to promote a product, service or brand is critical in the internet age.
Amplifying a message through social media is the easiest and most effective way to gain attention from the market and ultimately achieve success. Social media allows startups to reach a large audience on a limited budget, target specific interest groups and engage directly with customers, but social media management requires a strategic approach. Different industries require distinct social media marketing strategies for success.
Social media strategies that put micro-influencers at the forefront might suit some industries, while investing in paid digital advertisements within niche communities might make more sense for other industries.
Wood highlights that social media marketing can enable brands to engage directly with people and appear relatable, which can pay more dividends than traditional marketing techniques. Finding the right marketing strategy will give an early-stage business a significant advantage and increase the likelihood of becoming financially viable.
Maintain a lean team
Dale Wood considers “Waste not!” the maxim entrepreneurs should live and work by. A small and efficient team is critical to help startups deliver value to customers with minimal waste.
With a ‘lean team,’ startups can minimize overhead costs, respond quickly to changing market conditions and stay innovative. Such an approach prioritizes use of resources for essential functions and tasks that directly impact business goals and customer satisfaction.
Wood advises only employing the resources a company needs today, not those that the company may need tomorrow. By finding and retaining the best talent from the get go, businesses can cut down on turnover costs, limit payroll expenses and maximize efficiency.
Personalize employee health resources
The COVID-19 pandemic showed that providing support and resources for health and wellness can positively impact employee morale.
A startup’s commitment to creating a supportive and healthy work environment can help reduce stress and improve employee motivation, increasing engagement and productivity.
Be warned that a generalized approach to employee wellness may be seen as a half-measure – the wellness needs of individual people are different and a one-size-fits-all approach won’t do the trick.
Dale Wood advises collaborating with a health tech firm offering personalized nutrition and lifestyle recommendations so entrepreneurs can help their employees live better and work more efficiently.
Takeaways from Dale W. Wood
Wood defines startups as a carefully crafted blend of an original concept, a skilled team, a well-thought-out marketing plan and a desire to succeed.
His success framework prioritizes innovating fearlessly, operating efficiently and promoting a healthy work ethic. Entrepreneurs should remember that success often requires taking risks. Luckily, building a healthy company is an art that can be learned by anyone willing to go the distance.