Forward Fortnightly Archive: What a strong startup really looks like
In this article, we look at what a strong startup really looks like. There is a lot of noise out there right now, with many VCs offering views on benchmarks, best practices, and scenario planning.
There's some great value in these articles from leading voices and thinkers. But don't take them at face value. The reality is that each startup is as unique as its founder and the challenge they’re trying to solve.
Read on to learn more about how to ensure your startup is poised for success over the coming months and how to define ‘strong’ for your startup.
What does a strong startup look like in 2022?
We’ve been speaking to many of our portfolio businesses recently about how to prepare for the months ahead, where they can improve, streamline and grow. The truth is that no two of these conversations are the same.
It’s easy to be drawn into market benchmarks and metrics, but the individual context of a company is crucial and often overlooked. Whether it's the Rule of 40 for enterprise SaaS, ROAS and MER for an ecomm organisation or match rate and market depth for a marketplace, each one of these benchmarks should taken as a guide rather than a rule, particularly in a time of unprecedented uncertainty. VCs know this, which is why investment still flows into startups despite them often not achieving industry standards across growth and ROI.
Multiple survival mandates have been released from industry leaders. At Forward, we believe the most important thing you can do right now is taking the time to do some deep analysis of your business. Planning is key to navigating a downturn in the market, so base this on your business and not benchmarks alone.
Apply the learning.
💵 What impact will market conditions have on your customers and their spending? If you’re in the B2B SaaS space, this may mean having some tough conversations about negotiating contract renewals. As a B2C founder, this could be scenario planning and forecasting based on projects of your customer’s adjusted behaviour or spending. How will these things impact your revenue? Would with your finance team to build a realistic forecast so you can prepare accordingly.
📢How sustainable are your marketing channels? Startups are under more pressure than ever before. Marketers are facing the so-called ‘cookie-pocolypse’ and privacy concerns are hitting an all-time high. If the pandemic didn't force marketers to think differently, the startup funding squeeze certainly will. Many businesses have banked too much on paid advertising and now things need to change. Marketing leaders and founders should focus on what their business can do to build affordable, sustainable growth channels that can be relied on in the long term.
🛫Have you reviewed your cash flow, burn rate and runway? The art of managing how to deploy your capital into people and products to drive revenue should be constantly under review by the founder and their finance team. In downturns, it’s important to review this regularly, stay informed and make decisions early to ensure minimal cash is wasted during a period where fundraising will be more challenging.
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