Will your tech startup survive the year? Consider implementing one or more of the following tactics to maximize your firm's chances of living to see a second year of operations.
Outsource Non-Technical TasksGetting through the first 12 months can be a challenge for companies in any industry, but technology firms tend to face the most formidable obstacles. One way to side-step the high expenses and stress of full-scale business responsibilities is to outsource. What tasks should be given to others, and which should stay in-house? Focus on retaining your tech-oriented specialties and hiring specialists for non-core duties like accounting, legal services, security, marketing, and others.
Refinance Education DebtTech company founders who hold college and graduate degrees can do themselves a financial favor by refinancing education loans. Owners who opt for a student loan refinance agreement can immediately reduce their monthly expenses by getting lower loan payments with potentially better rates and terms. It's possible to refinance one or more existing student loans into a fresh loan and save money right away.
Entrepreneurs in the tech industry can use those savings to support their businesses. Why do working adults choose to redo their education debt in the first place? The primary reason is that they usually have much stronger credit ratings than when they applied for school loans. That's the beauty of refinancing in that it leverages the power of your current situation and delivers a better loan product, complete with lower monthly payments.
Avoid the Temptation to ExpandWhen things go well for the first few months in any new firm, owners tend to get starry eyed about expansion. Indeed, the allure of additional offices, a rapidly growing client base, more projects, and an influx of employees can lead to serious problems. Too often, several profitable months in a row don't sustain themselves, and startups that expand too early can end up in a financial bind. The wise course of action is to not expand significantly until after two full years of profitable operations.
Follow a Detailed 2-Year PlanBefore launch, develop a two-year operational plan that includes financial and task-oriented benchmarks. If you intend to borrow money from a bank soon, be ready to show them your written two-year document that includes anticipated profits, expenses, investments, marketing strategies, and other details of daily operations. Even if you don't plan to borrow, it's imperative to have such a plan on file and use it as a sort of blueprint. Without it, the chances of running adrift are high.
Invest in Marketing, Advertising, and PromotionOne of the most common pitfalls for new owners is not seeing the need to invest in the effort to acquire new customers and clients. Far too many startup entrepreneurs waste precious resources on equipment, office space, company vehicles, and all sorts of things that don't generate profits. The single most relevant task for people who operate new businesses is to market, advertise, and promote their company and its products or services.
Because ad campaigns and marketing plans can be quite costly and don't show results immediately, it's understandable that cash strapped principals are reluctant to devote funds to them. Surviving that crucial first year of operations means taking the risk of designing campaigns aimed at your target demographic, whether it's retail consumers, other businesses, or someone else. Don't expect to see immediate results in terms of profits or an expanding customer base. The goal for the first year is to stay afloat, set all the wheels in motion, and build smart habits.
Don't Sign a Commercial LeaseFor new businesses in every industry, one of the largest initial expense categories is rent. Avoid that common pitfall by working from home or in a shared public space. There's no sense in wasting precious financial resources on an office you don't need or want. Keep in mind that some of the world's largest and most successful technology corporations began in garages, extra bedrooms, basements, and living rooms of personal homes.
You can do it too. Just remember to set aside a private area that is relatively free of distractions. Then make sure to incorporate the latest privacy practices to protect company files and databanks from hackers. In the end, entrepreneurs who avoid signing commercial lease documents for several years can save a substantial amount of money.