You’ve developed a new idea that has disruption written all over it, you’ve inundated yourself with the gospel of GaryVee, you’ve pitched your idea to friends, family, and more venture capitalists than you can count. Then it happened. Someone believed in not only your product/service, but they wanted to back you on this ridiculous adventure called a start-up. So, now what? How can you ensure that funding provides a sturdy foundation for your business while making way for future company growth?
We’re glad you asked. We’ve compiled a list of 6 tips that will help you get the most out of your funding.
Conserve your money
When seed funding comes in, young entrepreneurs generally overspend. But remember the late nights and early mornings that got you this far. The time to make it rain will come. For now, create a painfully conservative budget where you can track how your funding is being spent. This won’t only teach you how to budget, it will help you determine an accurate burn rate you can use as fuel for future investor meetings.
One of the first decisions everyone makes when they get their first round of funding is to hire. Which isn’t a bad idea, but remember, these first few employees are the people that will form the company, so hire cautiously.
In your first round of hiring, hire generalists. Down the road, you’ll need people who are experts in their field but don’t mess with them now. Right now, you need people who can take on tasks outside their job description—hard working leaders who you could see directing divisions and departments down the road.
Hire employees who buy into your brand’s culture and vision
There will be potential employees who have the general skills and determination you’re looking for, but they won’t be the right fit. They’ll have trouble melding with your team and they’ll seem apathetic towards your company vision. Don’t waste your time trying to win them over. Find team members who are passionate about your brand culture. The best way to do this is by building an employer brand that will attract the type of passionate people you’re looking for. (Download our employer branding guide here)
Hold on to your mission
Chances are you’ve pitched your business to more than a handful of people. You know your story of innovation, your company goals, and your plans for growth more than anyone else. But, with an insurgence of cash, there’s a tendency for start-ups to ditch their original vision for profit. Ashish Rangekar, co-founder of BenchPrep raised $8 million in his start-up’s first three years. Here’s what he suggests, “It’s important to enjoy the influx of capital, but it’s equally important to bring it back into context and keep the vision straight.”
Remember your investors
Most investors don’t want to be left out in the dark. They want to see how their money is being spent and if there’s a way they can help. Most of the time there will be a check-in period around four months into your original funding. Feel free to call a meeting earlier and take any advice they might have. They’ve most likely worked with start-ups like yours before and have a few words of wisdom for you.
Measure your profitability
One of the most important steps following your first round of funding is measuring your profitability. Once you understand how you make a profit, you’ll be able to judge whether or not you’re charging the right amount for your product/service and how you can use your funding to increase profit. Here are a few questions crucial questions to ask yourself.
- How much does it cost you to acquire new customers?
- How long is the sales cycle?
- Are you getting the product pricing you were expecting?
- What is your profitability at the customer level?
- What will it be when your number of customers has grown by a factor of X?
Hiring is one of the most difficult (and therefore most important) parts of building a startup. We can help you not only find the right talent but brand you in a way that will attract the right people to your business.
Want to learn more? Download our employer branding guide here.