Starting off right as a founder: Avoid typical founder traps (Part II)

Starting off right as a founder: Avoid typical founder traps (Part II)

There are many things you can avoid when starting a start-up if you consider different aspects. We share the most important findings with you so that you don’t have to make any mistakes. 😉

1. A Target-Oriented Strategy

A strategy should help you say no to certain things. Saying no means focus!

Adjustments (pivots) should be anticipated as early as possible and implemented as quickly as possible in order to stay on the road to success. It helps to develop hypotheses that can be confirmed or falsified by measurement. A look at this helps to deepen and structure.

With the strategy you should be able to ensure that you have a gross margin of 20% left for the development of your business. You may ask yourself: why only 20%? The reason for this is that you can ensure that you stay one step ahead of the competition (because you have a budget for research and development). In addition, you can (and must) build a money buffer for bad times.


Pricing

Pricing depends very much on the product, business model and industry. In the B2C environment it can be said that the threshold for purchasing decisions for products below 200€ is significantly lower than above. The range between 201€ and 10.000€ is so-called no man’s land. For the individual, private consumer, the price for an initial purchase is too high and still irrelevant for B2B customers. The relevance for the latter customer group increases from the €10,000 threshold. From this point on, however, business is transacted through an invoicing contract.


Corporate Culture And Staff

One principle still prevailing in the startup world is “hire fast / fire fast”. Not every employee may like this approach, but there is uncertainty on the employer side as well. In this scene in particular, start-ups are constantly recruiting capable employees away from other start-ups, thus ensuring a high fluctuation rate. Therefore, the first tip for increasing the number of staff in your start-up is “hire people who are smarter than you”. In order to bind these people to the company in the long term, we give you the following advice: “Create a unique working environment in which employees feel comfortable and want to stay”. As a founder you should use your influence to promote and shape corporate culture at any time (e.g. through small rituals). Make sure that the company’s vision and mission fit. Basically, the more unique the culture, the less interchangeable it is. This can be helpful in reducing the usual fluctuation.


2. Sustainable Financing

Financing is essential for the success of your startup. Therefore you should pay attention to the following points:

  • Know the common vocabulary (Term sheet / Valuation / Shares / Virtual Options)

  • Know different financing models (Shares / Debt)

  • Nothing is easier than the first round of financing

  • Nothing is more expensive than the first round of financing

Pitching

In order to cut a good figure in front of an investor, a convincing pitch is indispensable. Roughly speaking, it should include the following topics:

  • Problem and Solution (Product)
  • Description of the market and how it is reached
  • What competencies does the team consist of?
  • How do individual stakeholders benefit?

Make the investment options simple and ensure that all points and options are comprehensible to each stakeholder. Further information and advice can be found here or at #CampusFounders. Besides all the tips and tricks, make sure that you don’t tell wild fairy tales and stick to the truth!

As an alternative to the classic investor round, you can also fall back on other forms of financing such as crowdsourcing campaigns in the B2C sector on kickstarter.com or in the B2B segment on seedmatch.de as well as ICO’s such as Neufund.org.

If you want to read the first part again, click here.

No matter which tips and recommendations from this article are useful for you or not, Campus Founders is always there for a personal consultation and can also refer you to other experts. With us you meet like-minded people of the startup scene in the Heilbronn area and you can network with each other, ask questions, profit from the expertise in our network, look for reinforcement for your own startup team and and and and!

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