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.
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Following are excerpts from "Unleash the Girls, The Untold Story of the Invention of the Sports Bra and How It Changed the World (And Me)" By Lisa Z. Lindahl
There is an idea that has popped up everywhere from Chaos Theory to Science Fiction and New Age memes known popularly as the "Butterfly Effect." Simply put, it is the notion that one very small thing—the movement of a butterfly's wing say, or the ripple in a lake caused by a pebble being thrown into it—can cause tremendous effect far away: the butterfly's wing a tornado, the ripple a large wave on a distant shore. Cause and effect, does it have limits? The field of physics is telling us that it takes only observation to bring a thing into being. We cannot consider these areas of investigation and not acknowledge that everything—everything—is in relationship in some way or another with everything else.
So, it is evident to me that commerce of any kind is, also, just about relationships. It all boils down, on every level to this simplicity. While we usually think of relationships as occurring between people—it is far more than that.
I used to teach a course in entrepreneurship specifically for women in The Women's Small Business Program at Trinity College in Burlington, Vermont. I made this concept of relationship and its importance central in how I taught the marketing thought process. I would stress that for a product or service to be successful, it had to meet a perceived need. There is a need, and it wants to be met; or it may be thought of as a problem to be solved. Or there may be an existing solution that is less than adequate.
For example: In my universe as a runner there already were a plethora of bras available, but they were inadequate for my purpose. The relationship between my breasts, my running body, and my bra was creating discomfort and distraction. A new solution had to be found, the relationship occurring when all these things came together had to be fixed. Utilizing this point of view, one sees a set of issues that need to be addressed—they are in relationship with each other and their environment in a way that needs to be changed, adjusted.
Nowhere is this viewpoint truer than in business, as we enter into more and more relationships with people to address all the needs of the organization. Whether designing a product or a service or communicating with others about it—we are in relationship. And meanwhile, how about maintaining a healthy relationship with ourselves? All the issues we know about stress in the workplace can boil down to an internal balancing act around our relationships: to the work itself, to those we work with, to home life, friends and lovers. So quickly those ripples can become waves.
Because Jogbra was growing so quickly, relationships were being discovered, created, ending, expanding and changing at a pace that makes my head spin to recall. And truly challenged my spirit. Not to mention how I handled dealing with my seizure disorder.
"My Lifelong Partner"
Let me tell you a bit about my old friend, Epilepsy. Having Epilepsy does not make any sort of money-making endeavor easy or reliable, yet it is my other "partner" in life. Husbands and business partners have come and gone, but Epilepsy has always been with me. It was my first experience of having a "shadow teacher."
While a child who isn't feeling she has power over her world may have a tantrum, as we grow older, most of us find other more subtle ways to express our powerfulness or powerlessness. We adapt, learn coping mechanisms, how to persuade, manipulate, or capitulate when necessary. These tools, these learned adaptations, give a sense of control. They make us feel more in charge of our destiny. As a result, our maturing self generally feels indestructible, immortal. Life is a long, golden road of futures for the young.
This was not the case for me. I learned very early on when I started having seizures that I was not fully in charge of the world, my world, specifically of my body. There are many different types of epileptic seizures. Often a person with the illness may have more than one type. That has been the case for me. I was diagnosed with Epilepsy—with a seizure type now referred to as "Absence seizures"—when I was four years old. I have seen neurologists and taken medications ever since. As often happens, the condition worsened when I entered puberty and I started having convulsions as well—what most people think of when they think of epileptic seizures. The clinical name is generalized "Tonic-clonic" seizures.
In such a seizure the entire brain is involved, rather like an electrical circuit that has gone out as a result of a power surge. I lose consciousness, my whole body becomes rigid, the muscles start jerking uncontrollably, and I fall. Tonic-clonic seizures, also known as "grand mal" seizures, may or may not be preceded by an aura, a type of perceptual disturbance, which for me can act as a warning of what is coming. The seizure usually only lasts for a few minutes, but I feel its draining effects for a day or two afterwards. Although I would prefer to sleep all day after such a physically and emotionally taxing event, I have often just gotten up off the floor and, within hours, gone back to work. It was necessary sometimes, though definitely not medically advised. I'm fond of saying that having a grand mal seizure is rather like being struck by a Mack truck and living to tell the tale.
Having Epilepsy has forced me to be dependent on others throughout my life. While we are all dependent upon others to some degree—independent, interdependent, dependent—in my case a deep level of dependency was decreed and ingrained very early on. This enforced dependency did not sit well with my native self. I bucked and rebelled. At the same time, a part of me also feared the next fall, the next post-convulsive fugue. And so I recognized, I acquiesced to the need to depend on others.
The silver lining of having Epilepsy is that it has introduced me to and taught me a bit about the nature of being powerless—and experiencing betrayal. I could not trust that my body would always operate as it should. Routinely, it suddenly quits. I experience this as betrayal by my brain and body. It results in my complete powerlessness throughout the convulsion. Not to mention an inconvenient interruption of any activities or plans I might have made.
Hence, I am the recipient of two important life lessons—and I was blessed to have this very specific and graphic experience at a young age. It made me observant and reflective, giving me the opportunity to consider what/where/who "I" was. I knew I was not "just" my body, or even my brain.
So, who or what did that leave? Who, what am I? Much has been written about trauma, and about near-death experiences, both of which seizures have been classified or described as. I won't delve into that here except to say that experiencing recurrent seizures and the attendant altered states of consciousness that sometimes accompany an episode (the euphemism for a seizure) changes one. It deeply affects you. It is both illuminating and frightening. It opens you up in some ways and can close you way down in others. For me it made it easy to consider the possibility of other ways to perceive, of other realms. And as an adult I became interested in quantum physics, where Science is pushing and challenging our long-held perceptual assumptions. Me, who was poor in math and disinterested in Science while in school! So if not merely body and brain, who am I? Spirit. And with Epilepsy's tutelage, I was encouraged to question, seek, try to understand what lies beyond.
Living with Epilepsy has also given me great strength. In realizing the futile nature of trying to have "power over" Epilepsy, I developed a deep well of "power within"—that inner strength that comes in the acceptance of that which one cannot change—and looking beyond it.
Through my experience building the business of Jogbra with the unique lens afforded me by my Epilepsy partner, I came to understand more fully the nature of power and what it means to be truly powerful.
Specifically, that having power and exercising it is not simply a manifestation of the ego. It need not be "power-tripping." It is how I wield my power that matters, making the all-important distinction between creating a situation of power over, power with, or empowering and having and creating strength in oneself and others.
Being powerful is a big responsibility.
To put all this another way: do I choose to create situations in which I am able to wield power over others? Or do I choose to empower others, sharing my strengths with them, while nurturing their strengths as well? The first is not true power. It is control. The second I believe to be the essence of true and positive power: strength. And integral to creating a more harmonious world, oh by the way.
While this may be apparent, even basic to others, it was an "aha!" moment for me. Too often in the years ahead I would give away my power and question my own strengths,. Time and again, however, my inner strength, my shadow teacher's gift, helped me survive and thrive until I could take responsibility for and embrace more fully my own power.
© Lisa Z. Lindahl 2019