By now, most aspiring entrepreneurs know the odds. The average fail rate for a startup in year one is roughly 10% – not too bad considering the rocky waters a new entrepreneur must navigate in their first 12 months. But at the two-year mark, that figure increases considerably; around 60% of startups fail in the first two years.
Before you resign yourself to what is essentially a coin toss, remember that there are always steps you can take to avoid becoming a statistic. Below, you’ll find a few expert tips for surviving those tenuous first couple of years.
In the first two years of your startup’s life, you will spend an inordinate amount of time raising capital. Some people prefer a “buckshot” approach to finding funding (essentially asking as many VCs, angels and incubators as possible). But this strategy can quickly tire a leader out, draining your energy away from your core competencies.
A better, more focused strategy is to find a champion, a credible lead investor that other investors will follow. If you manage to find a champion, the rest of your funding can fall in place like dominoes.
When Superb Crew asked successful entrepreneur Regan McGee to list his company’s milestones, he was quick with a realistic answer: “Still being here is a milestone in itself.”
The Nobul CEO followed up his answer with some sage advice. “Most companies struggle the first two years,” explained McGee. But he notes that his disruptive real estate digital marketplace achieved success by “striving to make purchasing real estate as easy and painless as possible for customers. That is a beautiful thing.”
McGee’s answer highlights just how vital consumers are to an emerging business. More than investors or employees, they hold the balance of power in your company’s success. Pay attention to what they want, and what excites, frustrates and engages them.
On a personal level, those first two years can be challenging for an entrepreneur. You put yourself through long hours, intense highs and lows, hits and misses. It can be easy to burn out, a fact that undoubtedly factors into the 60% fail rate statistic.
Mentally prepare yourself for the “new normal,” those long working hours and seemingly insurmountable obstacles. Then, try to find some sense of work-life balance around it. You may think that taking time away from work signals a lack of ambition, but that’s not true. Sometimes the best thing you can do for your company is to prioritize one of its chief assets: you, your energy, your brain.
Wins are critical for morale. Yet many startups doggedly focus on a grand vision – ambitious, world-dominating aspirations that are nearly impossible to achieve, at least in those first few years. Lofty goals can be fantastic (and investors love to see them), but to ensure that you don’t buckle under the weight of unachievable high standards, set short-term, realistic goals as well.
Set achievable monthly targets and annual goals. Get the whole team involved. And when you inevitably meet those goals, celebrate your successes as a team.
Even with these tips, the first two years of your startup will be a grind. These expert guidelines aren’t meant to promise smooth sailing; instead, they can help you mitigate risk and set your business up for long-term success. Good luck!