6 Decisions You Will Have to Make in the First Few Years of Running a Startup
Getting a startup off the ground is a feat in and of itself. Despite all of the planning and preparation done in the beginning stages, additional decisions will have to be made further on down the line. Knowing what decisions need to be made and when they should be implemented can permanently alter the overall direction of the business. During the first few years of a startup, a business owner will have to make major decisions.
What Direction You Want to Take
Startup owners will have to decide to expand its product or service offerings. Business owners will have to entertain the possibility of introducing new services or products to their customers. Some business owners will be able to identify the right personas to focus on while others will have a difficult time identifying how to adapt existing services. Adding options to existing services may better meet the needs of a customer but will require enough resources to successfully market their offerings.
Your Target Demographic
Businesses can attract a range of different types of customers. A customer base should always align with the customer’s core values. The wrong mix of customers requires more resources and may be more difficult to effectively serve. Although any customer interested in doing business with company can increase sales, that profile may not be an ideal fit for the business. Learning to say no to certain customers may negatively impact sales initially, but it will pay off later on down the road.
Lines of Credit
Deciding to open another line of credit is another major decision a startup owner may have to make during the initial years. Raising capital during the earliest stages may not necessarily mean that all capital needs will be met. Some business owners will have to consider debt financing as an option for meeting cash flow needs. Selling equity to investors may be a solution for meeting ongoing capital needs.
Finding a Location
Relocating may be another major decision a startup may have to make during the first few years of operation. While a company may operate from a makeshift location in the very beginning stages, relocation may be required if better opportunities are available in major hubs. Many startups find themselves scrambling for reliable interstate movers when they discover that the resources or relationships they need are concentrated in a given region.
Rethinking their profit margins is something all startup businesses will likely encounter during the first few years in business. Smaller margins may make it difficult for you to adjust to changes in material costs when major market events happen. A tighter margin may make it even more difficult to raise the prices down the line. Higher profit margins offer greater flexibility but can impact the firm’s ability to offer the most competitive pricing.
Figuring out just how involved the CEO should be in the day-to-day operations of a business is another major challenge. In the earlier years, the owner may have to be involved in nearly every aspect of the business. As the company grows, this level of involvement may make it very difficult to react quickly in real-time to new conditions or events. Business owners have to be prepared to figure out just how involved they need to be in different areas of the business. Identifying key decision makers for different areas frees up time for the business owner, allowing them to concentrate on areas where they’d be most effective.
It is rare for an entrepreneur to not be faced with growth challenges during the initial few years of operation. These are decisions startup entrepreneurs will likely have to make during the initial stages. Supported by a team of expert advisers, a business owner may find it much easier to make the right decisions.
Jeremy Sutter is a tech and business writer from Simi Valley, CA. He's worked for Adobe, Google, and himself. He lives for success stories, and hopes to be one someday.