When running an early stage startup, there isn’t much room for error. Resources are limited and a failure to maximize what you’ve been given could end up holding your business back from achieving the growth it needs to thrive.
On the flip side, proper utilization of limited resources can help spark innovation, drive profitability, and encourage your business to form an identity.
The question is, how do you make the most out of each resource you’ve been given at this stage of growth?
Limited Resources? You Are Not Alone.
You watch enough shows and movies like Shark Tank and Silicon Valley, you read enough viral articles about massive tech startups and entrepreneurs who made it big. Inevitably you'll start to think every startup is eventually infused with millions of dollars in outside cash. However, you’d be sorely mistaken.
While pop culture might lead you to believe that building a startup is all about tracking down funding and using that money to coast to the finish line. You have to know that the actual reality is much different.
According to data compiled by Fundable, angel investors fund just 0.91 percent of startups, while an even smaller 0.05 percent are funded by venture capitalists.
Think it’s all coming from the bank? Think again. Just 1.43 percent of startups get their money from the bank. In fact, the SBA offers less than 100,000 bank loans to small businesses per year -- most of which go to established small businesses.
So how are startups being funded, you may ask? Believe it or not, 57 percent are funded using personal savings and credit from the founding members. Another 38 percent of startups rely on small amounts of money from friends and family.
In other words, 95 percent of all startups get off the ground with their own money, or that of a close friend or family member. In case you’re wondering, the amount of money is very limited. The average amount founders personally invest is $48,000 -- while friends and family members contribute an average of $23,000.
Overall, the majority of startups don’t have lots of money, employees, materials, or safety nets to fall back on when things get tough. Find a startup that’s made it big and you’ve likely found a startup that knows how to maximize resources in order to get off the ground and start growing.
If you choose to get serious, you’ll understand that your access to limited resources isn’t a death sentence. It forces you to think creatively, take chances, and seek out opportunities that you may not have sought if circumstances were different.
How to Maximize These Precious Resources
While you certainly aren’t alone, don’t let this “power in numbers” give you a false sense of security. Every dollar, second, and product matters in a big way. Learning how to maximize these resources for the greater good of your startup will produce better results.
Each resource you have is important, but there are five that matter more than the rest. Making the most out of the following will give you a huge advantage.
1. Human Capital
Money is important -- and we’ll spend some time discussing it in the next point -- but there’s arguably no greater resource than the people you have on your team. You’re at a stage where you likely have just a handful of people working with you. So, you have to be conscious of what each individual is bringing to the table.
Productivity and output aren’t things you can take lightly. They will make or break your early success and a good startup founders will be conscientious and proactive in addressing the utilization of both time and energy.
In order for team members to be productive, you have to create an environment that (a) motivates them to work, and (b) prevents unnecessary distractions from taking over.
When it comes to motivation, the physical environment people work in has a direct influence on their focus and output. Your team needs to feel comfortable in the space they work, but they should also feel empowered. Wall graphics and business signage that reflect your company’s vision are cost-effective motivators. It’s also important to get the lighting right, as the right mix of natural daylight and warm artificial light can put people in a better mood.
The next step is to remove distractions that zap up time and focus. While there are numerous steps you can take, one of the best pieces of advice you’ll receive is to limit the number of meetings you hold.
Meetings can be useful -- but most of them actually hurt productivity. As this essay from Paul Graham explains, the impact of meetings goes far beyond the actual length of the meeting. In addition to eating up an hour in an individual’s schedule -- an hour-long meeting in the middle of the afternoon essentially splits that person’s schedule into chunks of time that are too small to experience any real productivity. In this sense, one simple meeting can compromise someone’s entire day.
If you must have meetings, put a cap on how many you have per week. For the best results, schedule them at the beginning or end of the day.
2. Cash
Now let’s talk money. In addition to managing human capital, you need to be smart with the limited financial capital you have on hand.
The first step is to come up with a budget. Yes, you have a very limited amount of data to base a budget on, but don’t let this hold you back from forecasting.
“You can safely assume certain costs based on the nature of your business and industry. The only way to get a true foundation is by capturing every single transaction from the get go,” entrepreneur Melissa Hollis writes. “I cannot emphasize this enough: If you aren’t diligent about capturing each and every one of your costs, you’re destined to be under budget.”
Once you have a working budget -- filter all expenses and financial decisions through it. Sure, there are situations where it makes sense to tweak or optimize the budget, but remaining disciplined will help you stay on track.
3. Operations
Do you know why Steve Jobs originally hired Apple’s current CEO Tim Cook back in 1998? As Apple was growing, the company was having trouble getting its processes to scale properly. Cook was known for being a mastermind of operations. He was brought on board to help smooth out these operational inefficiencies and get Apple back on track.
As they say, the rest is history.
While Apple’s flashy products are what draw customers to the brand, it’s ultimately the operational efficiency on the ground floor that has allowed the company to be so successful. As a startup, this is a great lesson in how important it is to maximize your operational resources.
Whether it’s saving a step in the production of a product or getting a unit from the warehouse to the customer in less time, streamlining operations is ultimately how you do more with less. It’s also how you set your business up to scale over time.
4. PR and Exposure
Despite its importance, most startups don’t have enough capital left over at the end of the day to invest much of anything into PR and exposure. Even without a huge budget, there are things you can do to get your startup’s name out here.
“Real-time marketing and PR is all the rage. Follow the news cycle and look for connections to trending stories. If you have a genuine tie-in to the story, let the media know directly,” PR expert Kris Ruby suggests. “If it’s a breaking news day, find any tie-in that is truly authentic. This applies to social media marketing and public relations campaigns. Show that you are a valuable source by contributing what the media needs.”
Guest blogging is another strategy worth trying. When you offer to write content for someone else’s blog, website, or platform, it’s difficult for them to turn you down. It’s even more challenging for them to say no when you explain that you don’t want any money in return -- just exposure.
Whether it’s trying to get a local news spot or a guest blogging opportunity -- never underestimate the value in picking up the phone and talking to someone. In a world where emails get lost, deleted, and ignored, proactive communication will get you places.
Adding it All Up
Hollywood may lead you to believe that running a startup is all about meeting with VC’s and spending millions on trendy office space and chartered jets. You’re familiar with a different reality -- and you aren’t alone.
The formula for success in the early stages of running a startup is to maximize resources and make the most of the limited time, people, money, operational capacities, and exposure that you do have.
Even using every single formula for success that is out there and available -- this won’t guarantee results. However, being willing and able to put these formulas into practice will certainly get you pointed in a promising direction.