Startup Tips for Moving to Profitability

One of the most popular questions I get asked when helping startups with their business plans and models is around lowering costs and moving towards profitability. As a former accountant and having been through the spend crazy Web 1.0 boom, it’s interesting to see how quickly startups are attempting to cut costs and attempt to get into the black.

Ted, John and Steven over at Dogster have put together a list of 10 tips for building a profitable business which I thought was worth sharing. Check out the post for the full explanation of each tip.

1. If being a business person is not your goal find a business partner immediately.
2. Consult anyone you know that has run a earnings-based business
3. Spend your money when it’s in the bank, not when the deal is agreed to (or never count your chickens before they hatch)
4. Spend at least 50% of your time selling.
5. Know thy accounts!
6. Prove your revenue models before investing in them.
7. Don’t lie to yourself.
8. Fail fast.
9. Hire slow and fire fast.
10. Be frugal about everything.

On #9, I’d suggest looking at a short-term contractor to verify the full-time need before hiring. After working at CKS in NYC back in the mid-90’s, I can certainly relate to #10. When I arrived they asked me how many computers I wanted! We had 2 fridges with only beer, etc. Earlier this year I provided 7 ways for startups to reduce their spending without reducing their consumption.

Interesting note… Ted from Dogster was the first person I interviewed for CN.