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Early Growth
February 13, 2014
I’ve met so many founders and early-stage teams who spend too much time worrying about the wrong things. These misguided concerns are a time-suck and not productive.

So I thought it’d be helpful to point out the three main “red herrings” that startups get caught up in—and shine a light on the things that, in my experience, have a far greater impact on future success.

If you’re going to worry (and if you’re a worrier, you know I’m talking to you!), shift your attention from here...to here...

1. Startups worry about funding.
You should worry about building traction.


You don’t need to have financing to build a strong company, at least not in the early stages. Sure financing can help accelerate your time to market, focus on product development, and ability to execute to scale. But it’s honestly not a ticket to success. I’ve seen so many successful companies (including my own!) that got to where they are through bootstrapping. Instead of worrying about where your next round is coming from, and diverting your attention away from your core business to the side business of fundraising, focus on creating a sustainable business model and executing. The plus side is that as your company builds traction, you retain your independence, control over your company, and equity.

2. Startups worry about their ability to scale.
You should worry about creating a viable business model, meaningful milestones, and a scalable infrastructure.


Scaling is ultimately a goal, but scaling as soon as possible, regardless of costs, should not be. If you rush to scale, you could be putting your company at serious risk. Rather than getting caught up in the rush to scale, you should spend that time and energy on planning and building your infrastructure to support your company as you scale.

Proper financial management is key. In order to scale, you need to first evaluate what effect your growth will have on your cash burn. Issues with your cash burn are magnified as you scale so if you’re having trouble with your burn rate now, sort that out before you even think about scaling.

Rather than overly focusing on the brass ring of scaling, take smaller steps. Identify meaningful milestones and work towards those milestones.

3. Startups worry about creating buzz.
Startups should worry about creating a growth engine to open the sales funnel, accelerate the pipeline, and build their customer base.


Buzz doesn't create revenue. Have you found a way to monetize your Twitter followers. Has your revenue increased apace with your number of LinkedIn connections? Have you converted all of the Facebook "likes" on your most recent blog post into paying customers? This is not to say that these kinds of metrics are meaningless. In other words, buzz can't hurt! But buzz in and of itself doesn't drive real growth.

Creating a growth engine means creating systems and processes to help your company find, assess, and execute on new business opportunities. This is how you build your customer base—not through an infographic going viral.

As a bonus, I’ll add one more worry that is misplaced: worrying about failure. We all know the statistics, and you do need to have your eyes open, but worrying unnecessarily about your potential failure takes time away from focusing on the positive steps you can take to position your startup for success.

What are you worried about? Tell us about it in comments below or contact Early Growth Financial Services.

David Ehrenberg is the founder and CEO of Early Growth Financial Services, an outsourced financial services firm that provides small to mid-sized companies with day-to-day accounting, strategic finance, CFO, tax, and valuation services and support. He’s a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.

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I’ve met so many founders and early-stage teams who spend too much time worrying about the wrong things. These misguided concerns are a time-suck and not productive.

So I thought it’d be helpful to point out the three main “red herrings” that startups get caught up in—and shine a light on the things that, in my experience, have a far greater impact on future success.

If you’re going to worry (and if you’re a worrier, you know I’m talking to you!), shift your attention from here…to here…

1. Startups worry about funding.
You should worry about building traction.

You don’t need to have financing to build a strong company, at least not in the early stages. Sure financing can help accelerate your time to market, focus on product development, and ability to execute to scale. But it’s honestly not a ticket to success. I’ve seen so many successful companies (including my own!) that got to where they are through bootstrapping. Instead of worrying about where your next round is coming from, and diverting your attention away from your core business to the side business of fundraising, focus on creating a sustainable business model and executing. The plus side is that as your company builds traction, you retain your independence, control over your company, and equity.

2. Startups worry about their ability to scale.
You should worry about creating a viable business model, meaningful milestones, and a scalable infrastructure.

Scaling is ultimately a goal, but scaling as soon as possible, regardless of costs, should not be. If you rush to scale, you could be putting your company at serious risk. Rather than getting caught up in the rush to scale, you should spend that time and energy on planning and building your infrastructure to support your company as you scale.

Proper financial management is key. In order to scale, you need to first evaluate what effect your growth will have on your cash burn. Issues with your cash burn are magnified as you scale so if you’re having trouble with your burn rate now, sort that out before you even think about scaling.

Rather than overly focusing on the brass ring of scaling, take smaller steps. Identify meaningful milestones and work towards those milestones.

3. Startups worry about creating buzz.
Startups should worry about creating a growth engine to open the sales funnel, accelerate the pipeline, and build their customer base.

Buzz doesn’t create revenue. Have you found a way to monetize your Twitter followers. Has your revenue increased apace with your number of LinkedIn connections? Have you converted all of the Facebook “likes” on your most recent blog post into paying customers? This is not to say that these kinds of metrics are meaningless. In other words, buzz can’t hurt! But buzz in and of itself doesn’t drive real growth.

Creating a growth engine means creating systems and processes to help your company find, assess, and execute on new business opportunities. This is how you build your customer base—not through an infographic going viral.

As a bonus, I’ll add one more worry that is misplaced: worrying about failure. We all know the statistics, and you do need to have your eyes open, but worrying unnecessarily about your potential failure takes time away from focusing on the positive steps you can take to position your startup for success.

What are you worried about? Tell us about it in comments below or contact Early Growth Financial Services.

David Ehrenberg is the founder and CEO of Early Growth Financial Services, an outsourced financial services firm that provides small to mid-sized companies with day-to-day accounting, strategic finance, CFO, tax, and valuation services and support. He’s a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.

Related Posts:

Early Growth
February 13, 2014