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We are surrounded by startups

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BY Sam Davies

{Director}

27 October 2016

Reading Time: 3 minutes

I must admit I don’t really like the word startup. It’s one of those buzz words that is totally misrepresented. When it is mentioned you think of shiny tech offices with denim-clad, baseball cap wearing kids buzzing around on hover boards. So many of the conferences and talks that I attend these days are focussed on ‘Startup business and its place in our evolving economy’.

I think the misrepresentation of what a startup actually IS, is the reason 90% of them fail in the first place.

In my opinion, a startup is just a new business that has the intention to scale quickly.  

What business doesn’t start out with projected growth? A startup is just a small business. This morning I was thinking about the two businesses that I have started myself, and I have never once described either Scrimshaw or Digital Noir as a ‘tech startup’. In reality though, that is what they both were/are.  If I look at some of the other businesses I have been involved with that have failed (or are doomed to), I can see that their self-reference as a startup has inherently made them vulnerable to the pitfalls of any modern business. (I should mention here that I am talking about bootstrapped or non-seed funded companies here.)

Things like:

  • Overestimating potential (earning, user acquisition, positive reception etc.)
  • Lack of planning (long-term business plans, short term industry trends etc.)
  • Overspending
  • Lack of quality people

As self-referential ‘tech startups’, these businesses had a pre-conceived (and very misguided) notion that growth would happen quickly and profits would start flowing.  It took me 2 years before I had enough clients at Scrimshaw to properly cover my overheads, it took me 5 years before I hired my first member of permanent staff. I was growing organically, and although I wanted to grow faster things took time, and taking out $50k from the bank wasn’t going to change that. Throwing money at a business is a great way to go bankrupt quick. Throwing time and energy at a business (shit loads of time, more than you can imagine) is how you get a small business off the ground.

A recent Forbes article defined a startup as:

[A business] generating revenues below $20 million [and with] less than 80 employees

Wow, that sounds like most of the businesses in Australia right? Uber is definitely not a startup, they have an estimated worth of $50 billion and made profits of $500 million last year. They are a multinational logistics company!

But for the rest of us mere mortals we are startups, right? I think an interesting analogy is to look at how ‘tech startups’ differ from a bricks and mortar business. The way a new boutique clothing store thinks about its first year of trading is very different than most app startups do. But, I am not sure why that is. They both face the exact same problems:

  • How to get people to hear about them
  • How to get people to buy/use their products
  • How to make a profit and cover overheads

I would argue that if more app startups thought like brick and mortar business, less would fail within 6 months. To grow a business you need to dedicate time and love and attention and of course money and nothing is going to happen quickly and Google are not going to buy you out for $100 million. If you are ‘starting up’ think small first and with time big things can happen!

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ABOUT THE AUTHOR

Sam Davies

Sam has been running a Digital Agency in some form or another for almost a decade. He loves the internet and the positive changes it has brought to the world but still loves time away from the glowing cubes. Surf, Fish, Drink, Cook, Laugh….Drink! You can follow him on Instagram @samdaviesdn and on Snapchat @digitalnoir

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