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What You Should Immediately Do After That Big Investment Rolls In

Business

Funded startups that suddenly find themselves flush with cash need to know how to put it to good use to impress their investors and grow. Unfortunately, there is no shortage of stories of startups growing too fast and falling on their faces. Young entrepreneurs rarely have the experience to allocate large amounts of funds, which can lead to slow, unnecessary purchases or overspending. Being able to properly and effectively distribute the investment will be critical to the future success of the young company.


1. Increase Staff

After receiving a major investment, most startups will immediately look to increase their workforce. Unfortunately, this can easily lead to overstaffing. While a strong sales team is important to increase revenue, the infrastructure and tools need to be in place before these employees can be effective. Hiring a balanced staff will provide far more benefits than overstaffing a single department to drive sales. (A robust sales team is of no use if the website crashes whenever a customer attempts to complete a purchase). Growing the business horizontally to establish a strong employee foundation will provide many long-term benefits, and can help prevent wasted capital.

2. Manage Finances

Building a dedicated accounting department is the best thing a startup can do to accurately monitoring expenses and revenues. This will give the young company a strong handle on where it is spending unnecessary funds, and it can identify which aspects of the business need more money. Also, it will provide a set of clean books, which will be indispensable for future growth projections and in attracting additional investors. A strong chief financial officer will hold the rapidly growing startup accountable for its purchases and investments to assist in understanding what makes the business profitable.

3. Continue Research

Investors want to see consistent progress and growth after that first round of funding, which is why startups should always invest in research and development. Whether it is fixing current systems or designing a new product, perfecting current offerings and/or developing new ones are essential to long-term, sustainable growth. Additionally, now more than ever, the user experience and design of the product and website contribute significantly to sales and customer loyalty. If your website or product have a poor design, you will find that it is difficult to retain customers.

4. Hire IT

Hiring tech support or an IT team, depending on your size, increases data security and decrease productivity loss due to technology down time. This dedicated group will ensure internal and external systems are properly maintained in working order, allowing the business to continue operating efficiently. In addition to avoiding potential downtime, an IT team will keep proprietary data and sensitive information safe from hackers. Depending on the industry, data encryption may be mandatory.

5. Ensure Legality

An important area that is frequently overlooked by startups is creating a proper legal department or ongoing partnership. Every startup will need legal advice, and with local, state and federal laws consistently changing, the need for legal guidance grows more important. Writing, reviewing and executing the necessary legal documentation can protect the budding business from any negative ramifications, as well as ensure growth is always on the right side of the law. If the startup relies on its intellectual property (IP), there is a strong need for consistent legal council to monitor and maintain a strong portfolio.

The best legal defense is prevention, and working with a qualified business attorney can reduce the chances of lengthy, expensive court battles.

6. Market Yourself

Depending on the stage of the startup, a marketing team can provide a significant boost to the bottom line of the company. These experts can create and run lead generation campaigns, Google Adwords, social media strategies, content marketing and vendor relations. All of which will increase the exposure of the business. A brand with little awareness will have trouble reaching its target audience without an apt marketing team that knows where to find its customers. Growing the presence of the brand and entering new markets will be critical to the development of the startup and to impressing investors.

7. Office Space

A rapidly growing business will need a new office to house all of its employees and equipment. When selecting the new location, there are several aspects that should be taken into consideration: size, projected growth, location and layout. Young companies often rent or purchase an office space that is too lavish or too large for their current stage. While they may want to feel like they have hit success, they do not have the sustainable revenue to fund their luxurious accommodations. Projected growth should also be considered when choosing a new office, but with a reasonable timeline and expectations so as to avoid straining resources. When seeking office space, the layout should be taken into consideration, as it can reinforce the culture of the business. A well-built office culture will also attract top talent, which will be key to the forward progress of the company.

Time is one of the most valuable resources to a startup, and spending those much-needed funds on areas that will increase efficiency can be highly rewarding. Rapidly growing startups frequently fall into the trap of overspending when they receive a large investment. However, this fear should not deter entrepreneurs from spending money, as some expenses are necessary and others can offer incredible benefits. The more efficient a startup can spend its money, the better it is positioned for long-term success. Working with current investors, partners and a qualified business attorney can poise a young startup for a healthy future, as these professionals will be able to offer invaluable insight - based on their unique skillsets - in key business decisions.

3 Min Read
Finance

When There's Room To Fly, Women Soar: Why We Should Invest In Women Entrepreneurs

I think we can all agree that we are living in unprecedented times, and many of us are experiencing challenges in both our personal and professional lives. But it is important to remember that often, challenging moments present opportunities for change. Right now, companies and individuals are using this time to rethink how they conduct their business, the resources critical to their success, and how they go about their daily activities. And what we are seeing is that more and more people, especially women, are taking control of their lives by starting their own businesses.

While it is estimated that the number of women-owned businesses is one-quarter to one-third of all enterprises worldwide, there are still many women who aspire to make entrepreneurship a reality. A new Herbalife Nutrition survey conducted by OnePoll of 9,000 women across 15 countries, including 2,000 women in the U.S., found that globally, 72% of women want to open their own business. Of those, 50% don't yet have a business and 22% have one but would like to open another.

Women want to have more control over their future, but they are committed to helping future generations by being a role model for younger women; 80% believe this is a strong motivating factor.

The second annual survey, which explores women and entrepreneurship globally, revealed the overwhelming challenges women experience in the traditional workplace compared to their male colleagues. In fact, more than 60% of women said they would like to start a business due to unfair treatment in previous job roles. Of the women surveyed, 7 in 10 believe that women must work harder to have the same opportunities as men in the workforce. Results also revealed that 43% of women have delayed having children because they thought it would negatively affect their career, and 25% said they had faced pregnancy discrimination. 42% believe they've been unfairly overlooked for a raise or promotion because of their gender — and of those, the average respondents had it happen three separate times. These are a few of the challenges that have been a catalyst for the surge in entrepreneurship among women.

The irony is that startups founded and cofounded by women performed better than their men counterparts: on average women-owned firms generated 10% higher cumulative revenue over five years, compared with men.

With the barriers and negative experiences women cited in the workforce, it is not surprising that across the globe, the top motivation for starting a business is to run it themselves (61%). Women want to have more control over their future, but they are committed to helping future generations by being a role model for younger women; 80% believe this is a strong motivating factor.

But the women surveyed don't expect entrepreneurship to be smooth sailing: one-third of women with plans for entrepreneurship are "very worried" about their business — or future business — failing in the next five years. The top three challenges when starting a business center around finances — earning enough money to offset costs, having enough budget to grow, and financing their business. And when it comes to financing, women face stark disparities in the capital they often need to fund their business. Boston Consulting Group found that women entrepreneurs averaged $935,000 in investments, which is less than half the average of $2.1 million invested in companies founded by men entrepreneurs. The irony is that startups founded and cofounded by women performed better than their men counterparts: on average women-owned firms generated 10% higher cumulative revenue over five years, compared with men.

Women entrepreneurs create a source of income for themselves and their families. They are a vital part of our world's economic engine that society needs to support with flexible opportunities, mentorship, and access to capital. Herbalife Nutrition is proud that more than half of our independent distributors worldwide are women who set up their businesses and decide when and where they work and do so on their terms. We need to invest in women entrepreneurs, not only to help one generation, but to offer role models for the next.