In the world of entrepreneurship, we find inopportune situations to be the greatest learning opportunities in developing us both personally and professionally. But what happens when that failure gets the best of us? How can we leverage the dark abyss into something transformational?
For many entrepreneurs, a failed business is just a part of the game. Even the greats such as Mark Cuban have experienced the roller coaster ups-and-downs of the success and failures of business. But it is just like what Thomas Edison said when he was investing the light bulb, “I haven’t failed. I’ve just found 10,000 ways of how a light bulb won’t work.” To help aid you on your next venture, I have listed some lessons to set you off on the right path. Obviously, each startup business is different. But regardless of the field or the product, having a deeper understanding of the operational side of your business, especially after a first-failed attempt, can push you that much closer in reaching your financial goals.
Understand your Numbers and Create an Action Plan
In any business, it is important to utilize your revenue in the most optimal way. Start off by first understanding the overall breakdown of your finances. Know how much money is coming in (revenue), how much money is coming out (expenses), how much was borrowed (loans or venture capital investors), and last but not least, how much the company is making (profit).
Now, when it comes to monetizing your startup, be strategic in not delaying or overdoing the process, especially with venture capital money. One of the biggest mistakes many startup companies make is that they burn through the loans and investments to try and scale the market. While the concept does work well, it also adds a lot of risk. For this to be successful, it takes a lot of financial findings to reach a profitable market scale just to break even. But not doing so can leave your product and services under the radar. To solve this, you need to be strategic about your funding and when you should scale the business. Try testing your product on smaller markets. Even give free trials! The best thing you can do with that is understand how much of the market will respond to the product. If you see a strong interest, try leveraging that money in boosting your brand. If not, hold off on spending anything and go back to the drawing board in improving your services.
Scale it Slowly
As much as we want to drive our business to our end goals, we have to be tangible about the overall timeline and process before we can see success. Think about the time when you are learning how to swim. You never automatically started in the deep end. Instead, it was a long and tedious process. After a couple of lessons and multiple failed attempts, you began understanding the skills necessary to make you a better swimmer.
Similar to swimming, you want to take each process step-by-step. Unlike your other company where you were probably going with the flow, you want to make sure you are paying attention to the market. Know your numbers and translate that in what you can do to improve. Now to be clear, when scaling your business, you need to understand the manpower and financial resources needed for this to be successful. The idea to scale as fast as possible was just a myth only accomplished by the great companies we see today. For any startup, this idea is close to impossible. But it doesn’t mean the process cannot happen. To scale at a timely manner, you will need an overall strategy in the logistics and operations of your business. Be fully aware that the product itself is not the only thing expanding. In addition to your services, you will be required in looking at new office spaces, new hires, and new resources just to get you over that hump. While you may not see a huge profit immediately, you will see a strong financial health in the long run. Just continuously be cognizant of the numbers and the market.
Minimize your Expenses
One of the biggest problems startups have is that they burn through their financial investment almost immediately because they think that is what they need to spend in order to see success. While I do not disagree that there is much needed to invest in a company, I do think there are options in minimizing your expenses.
To do this efficiently and effectively, go back to reviewing your numbers. See what cost and expenses you can cut out. This can be something minimal such as office supplies to something big such as product suppliers. Do your research and of course learn from your mistakes. Remember, you have had experience with this before. Utilize those resources and try and network with former partners who can help you reach your financial goals.