How To Invest Your Time Wisely In The Early Startup Stages
When you are working on a startup, time is the most valuable resource you have. Your human capital is probably the biggest or only type of capital you have.
That is true first and foremost because in the early stages, your startup is not generating money, yet it is still burning cash. If you spend your limited resources on meaningless tasks, you will likely have to close down the project before it has a chance to succeed.
Second, you are by definition working on a risky venture. Even if you are burning very little cash, the opportunity cost of working on this project is very high – you could be making decent money with a regular job instead. Consequently, it is in your best interest to find out if you have a viable business as fast as possible.
Because of this, focusing your time and efforts only on the most essential, value-adding activities is crucial for a successful startup journey.
Figuring out if you are wasting your time, however, is not always straightforward – many activities give you the feeling of doing something productive yet are a total waste of time in the early startup stages.
The key to this puzzle is the teach yourself to distinguish between real and fake progress.
YC Partner Adora Cheung suggests figuring out your primary key performance indicator (KPI) and setting weekly goals related to it. This would help you bump down on your to-do list any task that does not have a direct impact on your chosen KPI.
The right primary KPI depends strongly on your business type, but in most cases, you are searching for a metric that lets you know if your users are deriving real value from your product.
Keep in mind that in some cases, even revenue by itself could be a fake progress indicator – a great salesperson can increase the revenue of the business, but if the offering does not provide real value to customers, high churn and lack of organic growth would quickly follow, which would create fundamental long-term problems for the business.
This does not necessarily mean that tasks indirectly related to your KPI don’t have any value. They might, but they usually don’t have a direct impact on validating or growing your business, which is important in the early startup stages. Media coverage, social media attention, or even raised funds are, to a large degree, vanity metrics. While they may correlate with the success and growth of the business, their impact is usually limited for an early-stage startup that is still proving a business.
Which Early Stage Startup Tasks Are The Most Impactful?
Keeping all of this in mind, in the early startup stages, the tasks that generate real rather than fake progress usually fall into two categories:
- Talking to customers: Actively selling your product, running validation experiments, or trying to gather feedback from existing customers is usually your top priority. It lets you grow your revenue, but even more importantly, it shows you if you are moving in the right direction towards product-market fit.
- Building your product: You need to work on developing your startup product, but it’s no. 2 for an important reason: don’t build before you have talked to customers! Building is usually the most expensive and time-consuming activity, and it could be deadly if you are doing it before you are confident you are moving in the right direction.
All other tasks – improving your website design or copy, growing your social media accounts, going to conferences or other events, etc., usually have a low impact on your KPI and are more often than not a waste of time in the early startup phases.
To summarize, to make sure you are focusing exclusively on value-adding activities while avoiding the pitfall of fake progress, you need to:
- Choose the right primary key performance indicator
- Track your KPI progress weekly
- Rank the tasks on your to-do list based on their direct impact on your chosen KPI (highest to lowest).
via Forbes – Entrepreneurs https://ift.tt/2YlOx3y
February 19, 2021 at 12:56AM