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For tech startups, the struggle is real.
New companies come and go in pursuit of being “the next big thing.”
Meanwhile, workaholic mentality and long hours become the norm for those looking to stake their claim. After all, the Facebooks, Slacks and Hubspots of the world didn’t happen by accident.
That being said, many tech startups fall into a trap that’s often difficult to talk about:
A total lack of cash.
There’s no denying that profitability isn’t an overnight Cinderella story for most in the tech world. Even so, viable companies need to prove their cash-flow potential for the sake of staying afloat, let alone appealing to potential investors.
If money is or is becoming an issue, you’re certainly not alone.
You shouldn’t let this become the norm, though. When businesses try to go full-steam ahead without making any money, they could very well find themselves on a crash course.
For those currently struggling, now’s a prime time to assess where your business might be leaking money and likewise what you can do to shore up profits ASAP. Here are some problems to consider as well as solutions to put you on the right path.
You Don’t Have Monetization in Mind
The more avenues you have to sell something the better.
Whether it’s monetizing your business’ mobile app or finding affiliate opportunities, having multiple revenue streams for your business is an obvious game-changer. Even if your physical or digital product is still in its infant stages, think about how you could sell your expertise or know-how as a consultant.
If you have potential customers approaching you and nothing to sell them, you have a problem.
You’re Too Concerned with Investors
As noted, profitability may take years in the startup world.
The end-goal of so many startups is to eventually get acquired or bought out by an investor. While this is certainly a viable path, it’s also one that’s time-sensitive.
Ask yourself: how long can you realistically hold out? A year? Two years? Getting acquired isn’t a waiting game: it’s a process that requires you to be proactive. That process can’t truly get off the ground until you’re making money.
The best way to prove yourself to investors? Produce something that an audience is willing to pay for a masse. It’s a simple concept that oftentimes gets lost on us.
Your Pricing Strategy is Out of Whack
Speaking of selling, don’t forget how the fine details of price impact your bottom line.
Bear in mind that many businesses are impacted by the classic startup pricing dilemma of selling themselves short.
As a new business on the block, the assumption might be that undercutting the competition in terms of price might be the right move. However, this can backfire as you look like a bargain bin option against your premium competitors.
One way to experience the best of both worlds in terms of price is by offering a low and high-priced product. Positioning and marketing can help you score those big-ticket sales, so don’t assume that pricing up is impossible.
You Look Too Much Like the Competition
An obvious mistake but one that bears mentioning. If you’re selling a near-identical product as someone else or have a similar sort of front-facing marketing strategy, you’re dooming yourself.
Again, positioning and marketing are key here. Ask yourself how your core values, culture and background can immediately set yourself apart from the competition. Put those features on display for the world to see to signal the unique side of your business rather than look like every other face in the crowd.
You Have Trouble with your Talent
The talent you have on board can be the cause of some of your most pressing money woes.
The high cost of employee turnover is an obvious problem if you can’t seem to keep folks around for the long haul. The mere time it takes to assess, hire and onboard a new employee means lost money and productivity on behalf of multiple members of your team.
Not only that, but consider that you might simply have too many dedicated employees on deck (or some that aren’t pulling their weight). It may be time to do some soul-searching and consider downsizing or relying on contractors and freelancers to pick up some of the slack.
You’re Not Winning Any Headlines
PR is a major pain point for startups for obvious reasons. However, those struggling with cash shouldn’t expect a PR team to serve as their miracle worker. Having an active presence in your industry’s social space and blogosphere is a good starting point, especially the viral nature of content today. Avenues such as Help a Reporter Out can also get more eyes on your business and its story.
Rough patches are par for the course for the vast number of tech startups out there. That said, it’s crucial for businesses to nip the problems above in the bud before they snowball out of control. Rather than throw in the towel, take the proactive steps to get your business on the right track.