Nibletz Staff
Capital is precious—and must be treated as such. Below are three points companies should consider when allocating their funds in hopes of growing their businesses:
Hire Quality over Quantity
Many startups operate under the myth that their people should be paid a minimal amount, or even receive no salary for a period of time, in exchange for the larger payoff down the road. That may be fine for founders or executives that have other means to ride out the early days, but the reality is that most employees still need to “put food on their tables.”
It’s better to pay a smaller group of employees more money than to hire a larger number of folks on the cheap. That is, hire quality over quantity. Why? For starters, people who are paid less, even if they’ve bought into the startup opportunity, generally become dissatisfied sooner than later. Secondly, larger groups tend to work more slowly, bogged down by more meetings and lack of consensus.
While it sounds contradictory, smaller teams—especially top talent paid well—can deliver bigger results. Not only are they more motivated and productive, they also are forced to be more creative, they decide and act more quickly, and they build stronger bonds. All of this translates to a greater return on investment for the business over the long-term.
Keep Pitching the Company
When building a management team, many companies seek strong business development talent in one or more individuals. That’s fine, however in the early stages of startup, these leaders should remain focused on effectively pitching the company to raise more money—versus trying to drive sales.
After all, startup companies are typically small and not ready to take on tons of new business. Additional fundraising will enable a company to develop and market its product(s) sooner and then scale to handle increased business and revenue opportunities.
Investing in leaders with exceptional presentation and relationship-building skills is extremely valuable to a startup company, helping to succinctly get the desired message across to other potential stakeholders.
Launch Sooner than Later
A simple, reliable product today is better than a full-featured one tomorrow. Too many startup companies hold off launching their product(s) while trying to incorporate every last feature and functionality.
Not only does this delay time-to-market, but more complex products tend to have an increased number of “bugs” and support issues, which ultimately eats into existing capital more quickly.
Focus on a minimal number of features that will lead to the launch of a robust product sooner than later. And then use your remaining capital—not to mention revenue from the faster, successful initial release of your product—to incrementally add features and functionality.
While the above may seem obvious to most, many companies continue to take steps in the opposite direction when allocating their capital, only to find themselves struggling to stretch out their funds. The smartest, most successful startup companies tend to more efficiently manage their capital in these key areas.
Vijay Nadkarni is founder, president, and CEO of Mobiplex, Inc.
