Managing a startup requires a lot of patience and skill. Each day will bring new challenges. Frequent firefighting during the initial stages is very common. Liquidity issues will crop up every now. It will be extremely important to keep close tabs on the performance of the organization and be ready to recognize issues early on. Before anything else the key performance areas and objectives for the company should be clearly defined and outlined. The measurements should be very objective. e.g. Sales per employee, case load per officer, bounce rate etc.
There are 5 important areas to track a startup’s progress:
Team quality and contribution
To me the team is the most important if already available. Else consider yourself as an employee and expect performance accordingly. Make a excel track sheet and list down the deliverable for everyday. Be ready to hold yourself/employee accountable. However, please be reasonable also as Rome was not built in a day. Be ready to upgrade yourself/team with the required knowledge. Someone working in a startup should expect to do all kinds of work. It includes cleaning and packaging if required. Your’s truly has even served coffee and locked doors during the startup phase.
Product or service
Which product/service have you selected? Who are the competitors? Is your quality superior? Is it suitable for your target clients? What features would be attractive to potential clients?
Above are important questions to consider, as the product will drive your business. Inferior products/service will soon be out of favor and bad word of mouth will spread quickly, which is very difficult to recover from. Always focus on product/service on a daily, weekly, monthly basis and make adjustments as per client feedback.
Be sure to price your product appropriately. Pricing may have different components. They can include raw materials cost, rental expense, storage cost, labor expense, profit margin at the bare minimum. Prepare the various components of the cost incurred in an excel sheet for more clarity. The price decided should then be tested against similar products available in the market. Pricing strategy can be aimed at penetrating the market during the initial phase. It can also be priced at a premium, if novelty is associated to a product.
Sales and expenses
Always make sure to track your expenses closely. Many times new startups in the excitement of starting up make expensive hiring or capital expenditures. Take measured steps and increase expenses by increments. Keep a sales range target and start with a budget for that. Budget variance should not be more than 10% maximum. Hence, don’t overshoot the budget.
List out of the operating expenses like purchases, manpower, rent, storage, advertisement etc along with expected budget to start with. More granular details can be added depending on the nature of the business. Sticking to a business plan would yield many benefits and would help to stay on the road.
Get customer feedback at regular intervals. You don’t want your customer to be dissatisfied and create negative publicity. Feedback can lead you to many innovative ideas. Keep your ear to the ground. Also, seek feedback of experts, who can inform regarding implementation traps. Common implementation traps may include analysis paralysis, aim for perfection, not adhering to budget etc.
There can be different ways to track customer satisfaction, which will differ as per the business. A content business will focus on bounce rate to measure customer satisfaction, while a retail company will measure it by the number of returns and complaints regarding a product.