About 2,400 years ago Plato said that “the beginning is the most important part of the work”. These words have never been so true.
We live in the age of the business disruption model; new pathways created by startups have opened the floodgates to a wave of tech-savvy entrepreneurship.
While New Jersey is the fourth smallest state, it is the 11th most populous. Small and medium enterprises are crucial to the economy of the state where proactive and pro-business programs have helped these businesses thrive. As a result, New Jersey now also ranks 11th out of 50 states for the number of SMEs.
With new businesses and breakthrough innovations rolling out of the starting gate, the early stages of a startup can make all the difference.
Avoid stock dilution
Maybe you’ve invented an awesome new widget or found a new way to deploy an old product, or are on the cutting edge of an entirely new industry. Bringing in huge capital seems to be the hallmark of success and a great decision to make. Is the capital injection worth the cost? Your thirst and ambition to grow the business must be tempered with restraint – once you sacrifice ownership, you inevitably sacrifice control.
There will be a “right” time for the founder to step down for sustained, leveraged growth. However, reducing your stake too soon is a common mistake. A realistic business strategy and a solid financial plan – under your leadership – is the best way for the startup entrepreneur to succeed while earning the trust of your investors.
Think carefully about your financing options; there’s a lot to choose from, and one wrong decision can cause the focal point to switch to “size over strategy.” Don’t neglect the business.
The fable of “The Tortoise and the Hare” may have been the original case study. Inevitably, slow and steady wins the race, and it pays to carefully plan, observe, and test your business model before pushing to be first to market. The commercial landscape is littered with ‘early movers’ who, unfortunately, have nothing more than ‘what ifs’, while the most patient, structured and strategically savvy competitors establish themselves as the market leaders.
Invest in your employees, with conviction and care. Your startup is going to encounter incredibly bumpy roads and pitfalls. Who do you want by your side when times are tough? Whatever you think your business is selling, marketing or representing in 2022, the only guarantee is that it will change.
Think Amazon; he started out as a bookseller. Investors “bet on the jockey, not the horse”. Surround yourself with a team of dedicated professionals who can navigate the tough roads and successfully complete the journey.
Every member of your team – from intern to CEO – should understand and be able to articulate your value proposition. Your employees may bring diverse perspectives and a variety of intellects to the table, but for a startup to realize its vision, the team must share a collective, unified vision of how it defines success.
This unit does two things for your business. First, everyone, from the shareholder to the customer, hears the same credo. It reinforces your brand and sends a clear message to the market.
Second, when things go wrong – and they will – the word “failure” isn’t seen as a four-letter word, but rather as a lesson learned together. More confidence can be gained by overcoming mistakes as a unit than by insincere platitudes and “hi-mate-well met.” Trust and loyalty to the company’s vision ensures that the same mistake doesn’t happen twice.
Intellectual property is priceless
The importance of developing and protecting your intellectual property portfolio is more critical today than ever. Innovations happen at breakneck speed and the ability to turn a company’s intangible assets into proprietary rights is a prime competitive advantage.
Moreover, intellectual capital is easily monetized in the world of private equity. For most startups, the daily tactical challenges of keeping the lights on and growing revenue seem disproportionately important. It is essential to have a long-term vision and to make strategic, judicious and global investments to protect your intellectual property. The singular decision to save the lifeblood of your technology or invention will likely be the most important decision a startup founder has ever made.
How many startups think success is defined by funding? Ring the bell at the Nasdaq? Are you announcing an exceptionally solid quarter? Business success for the smart start-up entrepreneur requires a vision for sustainability and establishing the right processes that are implemented and embraced by a team of people who believe in the importance of leaving a legacy.
Reward your shareholders and customers by building a business that combines integrity and long-term value. This approach is what separates the only 9% of all startups that “succeed” from those that “fag it.”
Peter A. Levy is chairman of the Life Sciences and Emerging Markets practice at the Roseland law firm Mandelbaum Barrett PC and a member of the firm’s executive committee. He has run two public companies and is the author of the strategic planning tool, “Corporate Topography.”