Launching a startup is hard in any climate but post-pandemic there are some very real challenges to consider. However, there are some universal financial truths about starting up a new business and some that are unique to the world of tech startups.
If starting your own tech business has long been a dream lurking at the back of your mind, then perhaps now is the time to grasp the nettle and make that dream a reality. In an age where there are more entrepreneurs than ever, expert advice is everywhere. We’ve narrowed down the key financial points you need to consider when launching your tech startup.
Write a Financial Plan But Keep an Open Mind
Traditionally all startups need a finance plan. While the format this takes has changed over the decades, the principle is still the same. Though the reasons for creating one have evolved. Nowadays, it’s not the bank manager you’re trying to impress but maybe your investors. It might be that your venture is entirely self-funded but even so having your ideas and plans set down on paper is the perfect way to concentrate the mind and set the course.
You don’t need to create reams of documentation, far better to come up with a slide deck to lay down your plans and your development. Limit yourself to ten slides and tell your story as you see it.
And while this plan is a great place to start, like all good stories there are bound to be some twists and turns, some plot twists, along the way. Be prepared to adapt your story around these unpredictable events, keeping your goals in sharp focus.
Keep Checking Back on Your Product Audience
How do you know what your customers need? You ask them. The only way you’ll build a product that makes you money is to build a product that fulfills a specific need. That specificity is set by your customer, not you. You’ll only find that out through your direct mailouts, your customer surveys and your social media efforts.
Listen carefully and listen regularly. Use that information to design the perfect product but one that you can adapt as your business and your audience grows.
As a tech startup you’ll need to keep an ear to the ground, making sure you’re providing the most up-to-date and the most solution-oriented product. You’ll get all that information and more through listening to your customers.
Make Sure Your Distribution is Scalable and Affordable
Or to put it another way, make sure you can deliver on your promises. As your business grows, which it most likely will, have the finance in place to distribute on a growing scale. Whether that means taking on more resources in the form of staff or software – have these financial plans in place before they become an issue, not after.
Go as far as having them built into your financial plan even before you launch. One less thing to consider when you’re ready to grow.
Create a Culture Based on Your Financial Priorities
If you plan on building a team, part of that process is building a healthy culture into your business. Tech startups in particular can mean staff members working in isolation or silos but this can be addressed with a healthy culture of accountability and checking in.
If staying on top of invoicing matters to your business, create a culture of reward. Lay out to staff what’s important to the business and celebrate successes together. Learning to become a good leader is a new and often challenging dynamic to creating a startup that founders often neglect to consider. As well as designing, building and selling a product or service you must inspire others to grasp your vision.
“Vision is the ability to talk about the future with such clarity, it is as if we are talking about the past.” ~ Simon Sinek
Your team is the backbone to your organisation and the secret weapon to your financial success.
Hire Right
Following on from the last point, in order to create financial growth, you’re going to need to hire the right people. Be very clear in your own mind what you are looking for and the qualities your hires will need to bring to the table.
In an age where many people have retrained and upskilled, don’t rule out those who don’t come from traditional tech backgrounds. The determination and innovation they’ve demonstrated to retrain might be just what you’re looking for.
Consider soft skills such as communication, empathy, determination and collaboration every bit as much as the hard skills needed for the job. Someone who shares your vision, works well within the team and shows scope for picking up additional skills is a huge asset both personally and financially.
You’re A Salesperson, Not Just a Founder
You might not know it but you are. You sell your business to everyone you talk to and everyone you employ. If you can’t describe what you do or why someone should buy your product or service, then how can anyone else in your team?
If you struggle to find clear and concise wording then it’s time to develop your elevator pitch. That 30-second talk where you explain succinctly who you are and what you do. Practise and test it and you’ll become the best salesperson for your own business. Don’t forget to also create a pitch deck to grab investor attention.
Develop Financial Systems as Your Grow
That accountancy software you used at the beginning might have captured the right data to start with, but as your business scales, so too should your accounting systems. This generally involves financial investment and that’s an area where startup founders often need to take a deep breath.
In order to keep customers as returning investors into your business, you must offer them the best experience they can have. It’s what’s going to help you stand out from the competition.
To do this, your systems must match your promises. And besides the physical software, your processes might also come under the microscope for change. The “we’ve always done it this way” mentality isn’t a helpful starting point so regularly review the customer pipelines and customer journey. Place yourself as a customer and honestly reflect on how it felt buying your product or service.
Try And Maintain a Work/Life Balance (Your Financial Success Depends On It)
As a founder you’re going to find yourself pulled in many directions at once. Product testing, the technical side of things, marketing, accounting and recruitment. It’s a lot. You could quite easily be working or thinking about working 24-7. But whether that’s a productive use of your time is a different question.
To be at the top of your game, a degree of self-care is necessary. It might not be something you’d thought about much in the past but you’ll quickly learn about it when you feel the stress of running a startup starting to burn you out.
You might not get all the rest and relaxation you’d ideally want but carving out time for a little now and gain is imperative. A walk, a morning off, an earlier finish – all these things will help you stay focused on your finances, but also give you some much needed headspace to consider the other things you’ve got going on.
Get Networking
Again this might not sound like a thing you do but in order to push your business towards financial growth, networking can be great as a platform for learning as well as selling.
Taking time to talk to other founders in the tech field will give you a very good idea of who your competitors are and some of the common challenges you face. It will also give you an opportunity to pitch your tech solutions to other companies and take on board their pitches as potential solutions for your business.
At the very least, you should get into some interesting conversations and see who else is out there in your sector.
Reframe Financial Failure
At each step along the journey of starting a new business there’s the possibility of failure. This might not be a catastrophic failure but a series of setbacks. The point is however big the failure, it has the power to throw you off course unless you learn to address and handle it differently.
In the past it might have been that you see financial failure as a natural stopping point, a warning that your ideas aren’t viable. But if you’ve had the courage to start your own business and are convinced you’ve found a product or service that’s genuinely needed, stopping isn’t an option.
Instead reframe how you feel about failure. See each set back as another step further along the road to success. Opportunities to learn and refine your offer. Not easy to do but essential given the likelihood of failure at some point along your journey.
Starting a tech startup is a brave step, it requires resilience, fortitude and a willingness to learn. It might also be the most financially rewarding thing you’ve ever done. Turning your own skills into a business that adds genuine benefit to a customer can be exceptionally satisfying.
Take these financial tips on board and start putting your dreams down on paper, ready to turn them into a reality.