Leaving the corporate world to start your own business can be daunting enough. But choosing to embark on a new career in the high-growth, fast-paced and innovation-driven technology startup scene is a whole other ball game.
For many, it’s exciting and every day is a learning curve with new opportunities to grow or pivot your business. However, if expectations are unreasonable and the financial risks aren’t managed up-front and on an ongoing basis, the pressure to bring in revenue while keeping costs low can become overwhelming.
For startups and innovative leaders who persevere, there are clear financial rewards to be had despite the rollercoaster the first half of 2020 has been. Making sure the first steps taken into the startup world are calculated with care will be key to long-term success.
Ensure paying the bills isn’t a recurring stress
One of the first questions I asked myself when I started thinking more seriously about starting VAPAR with my Co-Founder Michelle Aguilar was, “How are both of us going to pay our bills?”.
This question is probably something a lot of people end up asking themselves at some point in their career, but when the answer to that question sits squarely on your own shoulders, as opposed to being able to rely on a regular salary or set hourly rate, it can be extremely daunting. It’s important to have this covered at the bare minimum, so you have breathing room to dive further into the business if needed, rather than being held back by financials for basic living costs.
When VAPAR started, I was lucky enough to be in a position where I had an amount of savings ready to use and that I could also move home to my parents’ house to (vastly) reduce my living expenses. Before we had started spending money on the business or new hires, I drastically changed my lifestyle and its associated expenses to ensure the money wouldn’t become a show-stopper for me personally, at least for the first year.
It’s not always as simple as jumping from one job to another
Many budding entrepreneurs plan to leave their salary-paying jobs to start their own business and earn their own salary as their own boss. But the reality isn’t that simple and it certainly wasn’t in my own experience.
As we set out to build a product and company to service the highly regulated public sector and utility companies, with services that cost tens of thousands of dollars for long-term projects and involve lengthy months-long sales cycles, it was unrealistic to expect to be earning a salary in the early days. In fact, we would need to make investments in staff to build our product to earn our first customers, which would eventually be critical to us earning investment to enable further growth and scale.
Consequently, in the first few months of eagerly designing and building VAPAR, I was also working a part-time job in my field of practice and even drove for Uber in the evenings and weekends. This extra cash helped us pay software developers who built our first MVP to take to customers.
Define the transition period, then dive in and don’t look back
The staged transition from getting a fortnightly paycheck to effectively no income was smoother because of the flexible working options that were available. I highly recommend staging the transition in the early stages of a new business as you will likely be able to manage both the emotional and financial stress of the new venture much better.
It is important to ensure the end of this ‘transition period’ is clearly defined in your mind. It could be defined by signing your first customer, landing your first chunk of revenue of a set amount, or committing to a certain partner agreement. Whatever it is, make sure you stick to your plan, let go of the extra work and time you were putting into the ‘transition’, and throw yourself into a hyper-focused state of mind to grow and build the business when the time is right.
For me, that time came when we got our first government grant, the NSW Government MVP grant and we landed our first customer in the same month! I realised that there was always going to be a bigger return on investment from a full-time commitment, as opposed to having a split-focus, but there had to be a certain level of market validation to justify this first. The revenue and grant coming in was enough justification in my eyes. As a business, we needed to ensure that our customer was on-boarded and being delivered value quickly and use the success to grow. When this was delivered, we then swiftly moved onto onboarding our next customer, and our next customer after that. Having a clear idea of when to go ‘all-in’ was critical to getting VAPAR to where it is today.
Amanda Siqueira is the CEO and Co-Founder of VAPAR