It’s not all beanies and bean bags: behind the scenes of the start-up industry
Article3 mins06 August 2019
Viewed by many as a dreamy mix of innovation, industry changing disruption and enviable culture, the well documented transformation of several start-ups to global tech giants have had a halo effect on the entrepreneurial sector. But a start-up leader’s road to success is never easy.
When we think about the world of start-ups, an image of unicorns and t-shirt clad tech billionaires often comes to mind.
And it’s understandable , with the spotlight shining on success stories or those which have managed to make a major impact on their respective markets, quickly...
But the reality is not so simple.
Nicole O'Brien, CEO of Fishburners, Australia’s biggest co-working community for technology related start-ups, says there are several misconceptions about start-up companies.
“It is definitely not all jeans, beanies and bean bags,” she said
“While there is an inbuilt sense of flexibility, and a somewhat casual dress code, beneath the surface it’s a lot of hard work and determination. You can’t ‘coast’ in a start-up, every team member has to pull their weight in these small teams.”
O’Brien noted that start-ups often must work in lean teams and tackle challenges and responsibilities that others would consider “mission impossible”.
“Without exception the early days are really, really hard work,” she said.
“Start-ups are usually focusing on a completely new market challenge, and simultaneously trying to create technology to solve that problem whilst attracting the staff and funding they need - often with very little in the bank.
“For single founders it means doing everything yourself. They need to use all their limited resources to the best of their abilities.”
Find something you want to change and make sure that’s at the core of everything you do
Significant cash burn
One of the most critical challenges a start-up faces is cash flow, with the cash burn rate being particularly fast when they scale up their teams in short periods of time.
According to O’Brien, rapidly entering new markets can “double or triple overheads overnight”, as start-ups try to stay ahead of market drivers and competition from larger firms with more resources.
“This requires a constant need to replenish the bank account. she says.
“Raising investment capital itself can be a full-time job for founders, often pushing their focus to the limits as they try to keep an eye on their day-to-day business.”
Adam O’Neil, the Founder and CEO of Asia Advisory, a start-up which helps Australian companies to market to and attract customers from across Asia, said one of the biggest challenges he has faced is the uncertainty about income.
“This can create a lot of stress as it's not always clear when your next payment will come through, however, we've been very lucky to have a strong foundation of clients who have supported us,” he said.
Gaining new business and markets
Another major challenge O’Neil identifies is winning new business. While he networks regularly, he believes it is important to be flexible and to treat every new introduction as a new business opportunity.
‘’Some of them may turn into new clients fairly quickly while others aren't quite ready, so we need to play the long game,” he said.
One of the best decisions O’Neil made early on was to join a shared office with other start-ups, which helped him get through some tough times.
“All of the founders help each other out and become a wealth of information when you're facing a challenge,” he said.
Drew Bilbe, who started Australian sugar-free drinks brand Nexba with co-founder Troy Douglas, said their biggest challenge has been increasing brand awareness and breaking through in a well-established industry.
“The beverage category is controlled by huge multinational companies that have very deep pockets, so it has been really important that we innovate, and stay ahead of our competition.” Bilbe said.
Surviving and thriving
Facing stiff competition, Bilbe and Douglas have naturally had to overcome many hurdles.
“With any accelerated growth you are going to have to personally and professionally stretch yourself to the limit. With renewed focus and a dedicated team, these times of feeling like you are on the brink inevitably transform into the most rewarding moments for true growth,” Bilbe said.
For those who are launching their own start-up, it is not a good idea to start a business purely to make money, as this motivation alone won’t be sufficient to sustain an entrepreneur through tough times.
“Success in business requires relentless passion and perseverance,” Douglas said.
“We bootstrapped Nexba for six years and it is because of this, our business has strong foundations to capitalise on our growth in the years to come.”
Bilbe agreed, adding that their mission of reducing the consumption of sugar and artificial ingredients means it is their role and responsibility to grow as large as possible.
“Businesses play a huge role in creating social change for good,” he said
“Find something you want to change and make sure that’s at the core of everything you do.”