Your technology startup will fail. The cold, harsh reality is that 75 per cent of venture capital-backed new companies never return cash to their investors – while according to one prominent VC only about five per cent ever fall into the “truly interesting” category. So where do these new businesses typically come unstuck? The answer lies in arguably the most fraught moment on the startup rollercoaster: the aftermath of raising early-stage Series A investment. That’s when entrepreneurs must start scaling their business, from a bunch of mates in a co-working space to a team of 100-plus – often scattered around the world.
From sourcing talent to finding customers, managing company culture to assembling a board, the barrage of problems founders encounter can at times resemble an endless game of whack-a-mole, played while juggling the everyday stresses and strains of running a business without burning through cash. Over the past year, author James Silver interviewed some of the UK’s most successful entrepreneurs and investors for Upscale, a new book on how to scale a tech startup. Here are a few of their tips.
Try to be aware of your limitations
“Founders, along with other key people, can sometimes be a limiting factor in a company’s growth. People who are right for a certain phase may not be right for the next. It works in both directions – there have been plenty of cases where a startup has brought in a highly experienced person with a glittering CV, but they’ve failed to make an impact. But equally, you’re going to also have leaders who were brilliant early on, but at some point just don’t scale with the needs of the company.”
Balderton Capital partner Suranga Chandratillake on why some leaders need to step aside as a company scales.
Find out who makes the decisions
“Always find out who the decision-maker in a corporate is. There’s no point in taking meeting after meeting with people who can’t say yes. Aside from creating that sense of fomo about your product or service, find out where the sign-off will come from. Then work out how to get in a room with that individual. Too many people are just too nice and tread carefully. Ask up front about a corporate’s processes, and if the person you’re meeting isn’t the decision-maker, then quickly find out who is.”
lastminute.com co-founder Brent Hoberman on how to partner with – and sell to – major corporations as a startup.
Go for home-grown talent over experience
“When you’ve raised a lot of money, it’s very easy to go on a hiring spree. We made precisely this mistake; we were so excited to fill the [new] roles that we just started hiring people because they had experience. But before you decide you need someone with five years’ experience from a large corporate or tech platform, give your home-grown talent a chance. Our best hires have been our interns. When you watch people like that rise up, it gives everybody confidence because they know they’re in a meritocracy.”
Sarah Wood, co-founder and chair of Unruly, on hiring.
Don’t sell umbrellas to camels
“One of our team says: ‘Don’t sell umbrellas to camels’. What he means is make sure you understand who your ideal customer is and focus almost exclusively on them. They are far more likely to become referenceable customers, who can then provide air cover for your sales leads, [by giving your company] a great reference. If you’re an enterprise business, then referenceable customers are huge. So over-index on keeping them happy. It should get markedly easier the more of them that you have.”
You can have the best product in the world, but it doesn’t mean your company’s profit and loss statement will always reflect that. Sure, it helps if you have a brand that’s beloved and known for superior quality, but too many other factors can get in the way of your company’s growth. The economy might tank. Your main supplier could go out of business. Market changes and technological advancements could render your business model obsolete (think Blockbuster and Toys R Us).
Things move fast out there, and there are some things you may never be able to prepare for. But as a business owner myself, I believe you can and should be looking ahead at market trends so you can stay ahead of any upcoming trouble — and grow or evolve despite whatever ominous developments may come your way.
If you’re wondering what I mean, I’d say most businesses should stay on top of the following, especially in the near future.
Tariffs And Other Product Price Changes
This is tricky territory because everything changes so quickly in the news. One minute, it looks like we’re entering the most insane trade war ever; the next moment, maybe we’re not. Still, I have to admit that right now — based on CNBC’s recent report — I’m glad I’m not in the business of growing soybeans.
However, if your business is affected by tariffs, you’ll want to stay on top of what’s happening and find alternative ways to do what you do without raising prices — for example, by adjusting to the rising cost of bananas, as explained by a Wall Street Journal article (paywall) that I weighed in on. Of course, if you have to raise prices, you have to. I believe it’s better to do that than shirk on quality.
by Patrick Galleher
Chances are, you’ve already gotten a taste of the power of review sites and what a single customer review can do for (or to) your business.
Review sites are no longer reserved for consumer products and restaurants. Now, they’ve taken on professional services such as medicine, hospitality and beauty as well as a recent surge in brick and mortar businesses such as grocery stores and gyms. They even have a place in our capital management firm, where we find review sites useful for seeing behind the scenes and helping to guide our underwriting decisions.
And, what’s more, BrightLocal’s 2017 Local Consumer Review Survey found that 93% of consumers read local reviews to make a shopping decision. In other words, no one’s getting away from the consumer-driven economy.
For that reason, if you want to build a successful small business in today’s market, you need to know how these sites can affect you, what they are and what you can do about it.
Review sites can affect your business.
Just how much can customer reviews – and your reputation on a relevant review site – affect your business?
The 2018 ReviewTrackers Online Reviews Survey found that negative reviews convinced 94% of consumers surveyed to avoid a particular business.
In addition, the BrightLocal survey found that 73% of consumers surveyed said they trust a local business more if it has positive customer reviews, whereas 50% of consumers said that negative customer reviews make them question the quality of a business.
More surprisingly, 85% of consumers in the BrightLocal survey trusted online reviews as much as they did recommendations from friends and family, which suggests that online reviews now hold nearly as much sway as personal referrals.
However, as powerful as positive reviews are, it’s negative reviews that I believe are more likely to spread through word of mouth.
Word of mouth has been – and, in my opinion, always will be – a powerful form of marketing and social proof. However, with the internet and the review sites that have grown from it, the equation is now more complicated.
A bad customer review on the right high-profile or niche review site can make a real impact on your business. On the other end, an amazing one can provide just the social proof your business needs to take it to the next level.
If you want to develop a positive reputation in the eyes of consumers, and maintain that good reputation, I believe you need to stay on top of customer reviews as closely as you would anything else.
Doing that is easier said than done, but the process for staying on top of customer reviews and your reputation on major review sites can be fairly straightforward.
Here are some tips for taking charge of your reputation on review sites and handling customer reviews.
Monitor all relevant review sites.
First, you need to know what the major review sites are for your industry or niche before you can do anything about them.
Here are some of the biggest and most important:
• Yellow Pages
Keep in mind that your industry might include one or more important niche review sites, so I recommend doing your homework to find all of the relevant review sites to follow.
Once you’ve gathered a fairly comprehensive list (even the major sites, such as BBB, Yelp, Facebook and Google is a good starting point for now), you can start to monitor your reviews on those sites once or twice a week depending on the volume of reviews you’re receiving.
Turn negative reviews into positives.
In my experience, one of the most important things to do when it comes to handling customer reviews is to reply to negative reviews.
According to the ReviewTrackers survey, “45 percent of consumers say that they’re more likely to visit a business if it responds to negative reviews.”
While I believe you should first look for a way to resolve the issue, sometimes there is no way to do so. In that case, it will still look a lot better to visitors looking over your reviews if you’ve replied and assured the reviewer that you’re sorry for their bad experience and want to reach out to reconcile.
There may or may not be any hope for fixing the review itself; however, at the very least, new visitors will see your efforts and know that you care, which can go a long way toward helping negate the effects of that bad review in the eyes of consumers.
Be persistent about obtaining positive reviews.
I believe customers are more likely to leave a negative review after a bad experience, so you need to be diligent in attracting positive reviews to relevant review sites.
In many cases, simply obtaining enough positive reviews to drown out any negative ones will be enough to maintain a good rating on any average review site. However, this can be difficult to do.
The best time to ask for a positive review is typically after a customer has had a great experience (i.e., they’re emotionally motivated to take action), as those customers will often want to give back for the amazing service you provided them. Even just a “We’re on Yelp!” sign that’s visible as they walk out can make a big difference.
Stay away from fake reviews.
Eliciting fake reviews is completely unethical to me, so this should be a given, but just in case it’s not: I believe you should never attempt to obtain fake reviews.
The last thing you want is to be kicked off a review site for violating their terms of service.
The ability to reply to negative reviews can be one of your most powerful weapons, and that’s placed in jeopardy by soliciting fake reviews. That’s aside from the fact that if you’re found to be obtaining fake reviews, you can be fined, as illustrated in a 2013 New York Times article (paywall).
However, in addition to this, consumers can generally smell fake reviews from a mile away. If you’ve ever come across an obviously fake review or multiple reviews with the same general written format, you know it’s a bit of a turn-off. Ultimately, I believe it will do your business more harm than good.