For entrepreneurs, slow and steady wins the race

My entrepreneurial journey started because of energy that wasn’t being channelled sufficiently as someone else’s employee. Drive and enthusiasm are necessary qualities if you want to be your own boss, and the benefits are plenty. However, entrepreneurship is increasingly bound up with the race to scale. In reality, the “move fast and break things” mindset puts many things at risk, and scaling up before you’re ready can lead to an irretrievable slow down at a later date. According to the Startup Genome Report, 74 percent of start-ups fail because of premature scaling.

Reassessing the need for speed

We tend to think that the fastest-growing companies are the most successful, which usually isn’t the case. When we talk about success, it doesn’t have to mean supercharged growth or the rapid accumulation of assets. “Build slow and build steady” might not get the Silicon Valley stamp of approval, but there’s plenty to be said for sustainable expansion underpinned by steady profits.

Many entrepreneurs rush headfirst into rounds of venture funding resulting in lavish burn rates. After the initial funds run dry, the next round begins and the cycle of injection and spending goes on. This kind of growth is often short-lived and potentially detrimental to the founder, their staff, and the business as a whole.

Studies show that entrepreneurs are at a considerably greater risk of burnout than the general population. They also report much higher incidences of depression. Working long hours, sacrificing personal time, and withstanding massive amounts of pressure all impact a person’s mental and physical health, not to mention their cognitive ability. When you’re immersed in a period of expedited expansion, staff can also feel overworked and emotionally disconnected from the business you’re relying on them to help build.

Business interruption always should be at the top of the risk register. Rapid spending and overextending in the name of growth is a dangerous game that can result in collapse when unexpected challenges arise and there’s no room to readjust.

Endorsing a more balanced approach

There are other ways of measuring success for everyone’s benefit that have nothing to do with growth hacking and everything to do with longevity. That might mean going slower or walking away from short-term gains, which could jeopardise your future position. I’m a strong believer in the marathon versus sprint mentality. For example, seed money can be sufficient to grow sensibly at the start, leading you down a more profitable path over time.

Whatever route you take, several elements are crucial.

• People – more than anything, it’s your team that helps you cross the finishing line. Your people are an irreplaceable asset that must be appreciated and taken care of. Make sure they understand the path you’re on, what’s expected of them, and how they’ll be rewarded. Longer hours and tough conditions don’t create an engaging atmosphere. To keep energy levels high, staff need to be treated with empathy.
• Company DNA – there’s something special about the culture of a new business where a small team lives and breathes its values from the top. Unfortunately, when bigger becomes the benchmark, these values can get forgotten and the essence gets lost.
• Customer focus – much like your staff, you must maintain a clear focus on your customer needs. Are their needs changing and are your offering and communication on point? You can spend all the money you want on marketing, but it’s wasted if the product isn’t right or you’re unable to meet demand.
• Cashflow – raising significant amounts of capital can lead to complacent spending. Cashflow will make or break a business and everything needs to be tracked back to tangible benefits, especially in high burn areas like customer acquisition, new product development, and resourcing.

Rather than going the ‘Icarus’ route, an entrepreneur must be passionate about the end goal and build a strong ethos. These foundations require accountability and a willingness to re-evaluate the business direction, recalibrating if necessary. To achieve consistent growth there might be times when big changes are required.

Growth means different things at different stages of a start-up. It’s not always about chasing big-ticket investment funds that can dry up fast. Especially post-pandemic, true growth is a healthy bottom-line, sufficient cash flow and a passionate team motivated to deliver outside of their comfort zone.

Mahwussh Alam, co-founder of One Perfect Stay.