9 Ways to Turn Around Your Startup
If you are a founder struggling with turning around your startup and you have not seen this recent New York Times article featuring Jessica Mah, CEO of InDinero, do yourself a favor and check it out.
Mah, who founded InDinero in 2009 when she was just 20 years old, shares how she transformed a drowning accounting software startup into a 75-employee business generating $3M in annual sales. InDinero is now on track to double their performance in 2015, and has raised a total of $8M from investors. So what can you learn from Mah’s journey?
Here are 9 ways, inspired by InDinero’s success, to turn around your startup:
1) Admit You Have a Problem
Metrics do not lie. It is essential that you stop, take an unemotional step away from your ideas, people, and dreams- and look closely at your hard numbers. Forget pipelines, forget “if, then’s” and take critical inventory of the story your numbers are telling TODAY. If they are trending positively, great! If they are stagnant or falling, then it’s time to preserve cash and make changes before it’s too late.
2) Make the Tough Calls
If you are honest with yourself, and the numbers are not at least STARTING to head in the right direction, you have to slash costs. An actual “pivot” means to literally stop in your tracks- no matter how fast you are running- and change direction. In order to do this, you must make those tough calls for change. Sometimes that can mean checking your ego, closing down the fancy office, and trimming the fat. If you have to fire good people now to seek great people to help you execute later, do it. Swallow your pride, delete your overhead, and head back to the drawing board.
3) Follow the Leader (s)
Facebook improved on MySpace, Google improved on AOL/Yahoo, Uber improved on the taxi industry, etc. There is Airbnb, Tesla, Apple and more. Take a look at the market leader in your space and really understand their unique value proposition. What are they doing that warrants such a huge valuation? How can your model provide a similar value? Imagine your business as a multi-million dollar enterprise. How can you refine your offering so that it mimics or improves upon existing successful ones? Maybe it is a shift in pricing, marketing, or that one critical feature that could catapult your startup onto the leaderboard.
4) Perfect Your Pricing
Evaluating your pricing sounds like a no-brainer when it comes to turning around your startup. However, I often see resistance, fear or confusion when it comes to price experimentation. Founders are constantly afraid of overvaluing themselves and risking buyer exclusion, or undervaluing themselves and getting crushed on their margins. Mah realized that the other SaaS leaders offered almost exclusive premium pricing options, and adjusted her initial $20/month software fees accordingly. Is your sales strategy based on targeting high-ticket big fish or getting a large quantity of customers at a more affordable price point? Knowing which direction to go can be the difference between year over year growth or burning through cash and hitting rock bottom. Whatever you do, don’t try to be everything to everyone- or you’ll truly be nothing to nobody. Commit to an identity when it comes to pricing, and own it.
5) Ask Your Customer
When’s the last time you spent months just talking to your target buyers about their wants, needs, dreams, and pain points? I do not mean sending out a stupid email survey or crunching social data about trends in conversations online. I mean actually one-to-one interviewing every potential customer to crowdsource the answers you need to improve your offering. When looking to evolve your model, sometimes just asking the right questions, forgetting what you THINK it should be and really listening is enough to get your company back on the right track. It is a slippery slope when you and your developers assume you know everything people want…and then find that your “expert” guesstimations have missed the mark. Make it easier on yourself and invest the time in real buyer due diligence.
6) People Power
When I talk to founders about what keeps them up at night, a large majority of them respond: “Finding the right people.” It seems that many times the top talent you want you cannot afford, or cannot manage, while the talent you can afford does not have the skill set or ambition to support your vision. It is the constant struggle of finding the dynamic people you need to propel your company to the top. And it is always a gamble. Look at Marissa Mayer of Yahoo, who went through a string of high-profile, multi-million-dollar-mistake bad executive hires. It happens to the best in the business. Becoming better educated on the art of the interview process is a simple first step towards stronger hiring decisions. Start by reinventing your recruitment process and watch the caliber of your team rise accordingly.
7) Time for You-Time
And I do not mean downtime. Spending a portion of every week on your self-improvement is one of the most valuable time investments you can make. Like exercising your body, it is imperative that you exercise your mind outside of your typical company challenges. Mah read over 100 executive management books in the course of a year. That is about two books a week! If that is too intense for you, how about trying to finish one new executive management book a month? At least make sure you spend an hour a day reading quality entrepreneurial blogs on how to improve the way you strategically think about your business.
8) Pro-Active Partner Protection
Whether it is your co-founder, executive team, or your investors, approaching your business partnerships with a preventative mindset is key. Have you actually had those hypothetical “What-If” conversations to understand how each of you would approach future problem solving (before you get there and emotions are involved)? Mah and co-founder have a creative system in place from which you can borrow. When they disagree on an issue, they both assign the issue a 1-10 based on how important it is to them. Whoever assigns the issue a higher “caring” number gets to make the call.
9) Keep Your Cool
This is one of the hardest ones. Especially if you have had to blow up your entire concept and start over. It’s natural to let your feelings of failure, embarrassment, or anger occupy valuable mental hours that you COULD be spending on moving forward in your new and improved direction. Not getting too high or too low, no matter how many millions of dollars are at stake or how the press or your circles have labeled you, is critical to reinvention. To turn around your startup, you must CALMLY channel all of your energy into one direction: improvement. You cannot afford to waste precious time on thoughts which do not serve this goal. Stay cool and keep moving forward, one day at a time.
Have you successfully turned around your startup in the past? How did you do it?
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