i3 | February 12, 2019

Risky Business: The Best Practices for Entrepreneurs

Steve Koenig

Entrepreneurship: It’s usually high risk with the hope of even higher rewards. Sacrifices are made, unexpected challenges encountered, and victories, both large and small, will be celebrated along the way. Entrepreneurs often say, “If only I had known.” From the initial business vision to the realization of desired success, no two paths are the same.

This is why CTA recently published Startup Best Practices — forged from new research conducted with emerging small businesses — as part of its ongoing mission to champion and support technology startups. Despite different backgrounds, experiences and entrepreneurial paths, the study shows that startup founders share several commonalities: a need for funding, guidance, growth and resources to help achieve their goals.

When it comes to brainstorming, partners, colleagues and a new business model top the list of most trusted resources. Nearly three-fourths (73 percent) of entrepreneurs indicate they relied on the advice of partners or colleagues to help them develop the idea or business model surrounding their most recent startup. In addition, half (48 percent) turned to friends and family, while legal counsel (33 percent) and mentors (33 percent) were commonly utilized among one-third of entrepreneurs.

Entrepreneurs may bootstrap the emerging business initially, but often more capital is required to really get things going and finding investors can be a challenge. While a variety of resources are available to entrepreneurs, it can still be a long, arduous process. The best way to find investors for the business? Leveraging one’s own personal network. To find investors, startup founders most often rely on those who they are closest to, including friends and family (63 percent) and partners or colleagues (60 percent).

To mitigate risk and exposure, savvy investors consider a range of factors before investing in a startup. Most commonly, they assess the ability to grow and scale (78 percent), followed by product viability (68 percent) and market validation (63 percent). Their team composition (53 percent) and business plan (50 percent) round out the top five.

Business Concerns

As a startup grows and evolves through various funding stages, so do business priorities. Companies in early-stage funding are generally in primary development stages, which leads to product development becoming a high area of focus. Among entrepreneurs surveyed, roughly eight in 10 indicate product/technology development was a top priority during the early stages of funding, with an additional 48 percent focusing on financing the business.

Hindsight is always 20/20, providing opportunities for entrepreneurs to learn and grow. When asked what they would have done differently during the early stages of funding, about three in 10 entrepreneurs say they would have approached fundraising in a different way. Twenty-two percent believed they could have done better regarding hiring and culture management.

Once past the initial stages of funding, priorities tend to shift from product development to growth and sales. Regardless of their specific stage of funding, 62 percent of entrepreneurs indicate they will prioritize scalability as they receive their next round of funding, with roughly half who plan to focus on growth (54 percent), product launch (51 percent), and expansion of the customer base (49 percent).

Need more help with your startup? CTA’s Startup Member Working Group offers a wealth of startup-focused resources designed to help entrepreneurs grow their business, including mentoring, advocacy, market research, education and networking programs

January/February 2019 i3 Cover Issue

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