We have waxed eloquent about the need for sustainability in the truest sense for startups with respect to consumption and conservation. Sustainability as a concept has a huge role to play in every facet of a startups’ existence to drive growth that would be recurring and long lasting. Let’s delve a little deeper into what really makes a startups’ growth truly sustainable.
A little background first. One of the biggest myths that startups tend to foster is of growing into behemoth sized entities with strong power and influencer within their respective domains in a short span of 2-3 years. The ground reality couldn’t be further away. A majority of startups fail within the first 3 years of their existence due to flaws in their fundamentals, poor execution of an improperly laid out vision and yes the big one, falling short of capital to run their day to day operation, threatening their very survival.
It starts with framing the right objectives. Instead of having a top level view towards profitability or winning over the market, companies should focus on sustainable growth as a key objective that drives all their goals. Whether it be with profits, revenue or sales volume, having steady and sustainable growth helps companies maintain a balance for every facet of their existence. In the current scenario, even venture capitalist backed startups also tend to face the same problem due to non-maintenance of enough cash flows. Here’s how adopting sustainability in different ways might help companies to register as a profit making unicorn in a longer term:
Having a Sustainable WorkForce
It’s necessary to have a steady and stable core team from the initial days. This is the real engine that powers the company’s wheels, so, it’s necessary to understand who would form this core and how they can be nurtured as they become key stakeholders in the growth story of the startup and discharge the most important tasks.
Having a Sustainable product
A sustainable product would be one that can have a smooth journey towards product market fit from the concept board. Starting up with a product whose future demand is shaky can be bad business. A sustainable product will be derived out of strong market and consumer research, identify a true pain point and provide compelling responses. The growth of the startup would then be organic, supported by the right Sales and Marketing effort. From the build to launch and execution, the startup has to have a long term vision, if it truly needs to have a sustainable existence.
Having Sustainable growth in Expenses
The largest number of Startups start with a small tranche of cash, supported by the well loved FFF’s – Friends, Family and Fools in any given order. Strategic usage of cash in hand, will be a very key driver of growth in the early stages. Executed wrong, a financial strategy can be the primary that expedites the decline and death of the startup. So never understand the importance of financial planning at a very early stage, slowly but surely increasing spends from pure existence to driving growth and expansion. Strategic decisions with financial impact at any early stage would typically be buy vs rent, manufacture vs procure, hire vs outsource and ultimately grow vs exist. At different points, different strategies would need to be employed, so that startups stay sustainable in the long run.
To plan for scalable and sustainable growth of the company
Rounding up, it’s important for startups to map out it’s future expansion in a feasible manner, which allows asset quality to grow and helps in managing a healthy cash flow. Remaining stagnant at a certain profit % will kill the business because its necessary to plan to adapt tactics to have a steady increase in your profits every year or else inflation will cap down your organization. Whether it’s about increasing the area of service, adopting tactics to increase sales and revenue, increasing the number of employees, to take credit or loans everything needs to be done in a manner, which does not hinder your present operations.