The Australian startup scene is very hot at the moment, especially in the tech space.
Everyday we hear about a new promising startup trying to make it in Australia or in the US, or a new incubator or accelerator launching.
Looking at this, one might think that it is easy to just find an idea, raise funds, go to the market and be successful.
But raising money can be a real struggle, and many startups decide to stop their journey because they can’t raise enough money and don’t think it is possible to make it without external financial support.
It might not be easy, but this is totally achievable if you follow some best practices.
1. Trust that building a startup with your own money is possible
Being part of the startup scene, you hear so many stories – from the media or through your network – about startups that have raised millions of dollars.
Many entrepreneurs with no connections with investors or who have been told their idea wasn’t promising enough to get funding can get discouraged very quickly.
The first step is to trust in your idea and actually think that it can work.
From there, see how much money you have in the bank, check if some friends or family might be willing to loan you a few thousand dollars, and take the leap!
Convincing yourself and checking how much money you have in the bank are the first bricks of that big mountain you are trying to climb.
What you need to do from there is just find smart ways to use your savings.
2. Focus on acquiring real paying customers
Many startups focus all their energy running after government or industry grants and VC funding.
But when you are launching your company on a very tight budget, it would be far better to focus your resources in acquiring paying customers.
This will not only result in inward cash flow, which provides the cash to run your business, but each new paying customer increases your valuation.
In the long run, this is what is going to make you successful, and not government handouts or short term VC funding.
Once you have established a solid and loyal client base, and more bandwidth, then you can start investing time in applying for grants, it will give you a plus but won’t set you back if you do not get them.
3. Stretch your Dollar
Be very careful with what you spend on and how you spend it.
Your only question when making an investment should be: What real return is this going to generate for the company.
Be wary of return-on-interest stories when the returns are fluffy.
Hard cash is what matters in the initial stages of growth.
You don’t have to spend big on brand name equipment, when generic equipment will perform just as well at half the cost.
You don’t need outlay expenditure on a swanky office in the inner city when a workspace in the suburbs will do the job.
Use free tools as much as you can, we started by using Google business email service which was free in the first few years, extensively used Skype for overseas communication when international phone calls were expensive.
4. Appearances matter a lot
The unfortunate truth in today’s world is that at times you are judged on appearances.
And often at the beginning it is necessary to appear bigger than you really are.
How can you achieve that?
First of all, all customer facing platforms (e.g. website or mobile apps) need to be spot on.
No need to invest tons of money in unnecessary features, it is important to only invest money (and time) into what really matters now.
Your website is what most potential customers will first encounter so invest your time and effort into delivering a website that gets your message across.
Spending big dollars will not necessarily deliver a good website, it’s usually your time and effort in working closely with your web developers which results in the biggest gains.
Secondly, use free web tools wherever possible in the initial stages of growth.
Use Google Docs, Mailchimp, Canva and other platforms as much as you can.
Thirdly, invest in search optimisation if it’s critical to your business, and use key words that your customers would normally use, rather than industry jargon.
Finally, choose your location wisely.
Set up your office in an affordable neighbourhood, but if you are dealing with enterprise customers, make sure that you have a serviced address in the CBD as appearances count.
A serviced address is not necessarily an expensive proposition.
5. Get the right hires
The wrong hires cost a lot more than entrepreneurs think, not only in recruitment costs but also in training and redundancy costs.
They reduce productivity and at times bring down the morale of the entire organisation.
This is one of the important items that shouldn’t be overlooked or reduced.
It is also important to take the time necessary to hire the right person rather than rush the hiring process for the sake of filling talent needs.