How to prepare your startup for long-term, sustainable growth in 2020.

Many of us will be starting the year with a list of ambitious resolutions. Cheap January gym deals will attract thousands of new members in crisp new sports gear, sweating off Christmas indulgences with the best of intentions to make long-lasting changes. However, studies show that most of these new members won’t make it past the end of January before throwing in the towel, leaving them with nothing but an expensive bill for a membership that will go unused.  

For veteran startup founders, the start of a new year represents the end of another review cycle as we begin Q1 2020. This means crunching data rather than pumping weights to figure out the overall health of the company. Following the structure of ‘Implement, review, learn, hypothesize, and repeat’ allows founders to work out which tactics really led to meaningful growth in revenue and customer base, and which didn’t. 

However, far too many less-experienced founders will explode off the starting line in January, with their eyes firmly set on their goals for the new year, and little thought for the learnings to be gained from the last 12-month cycle. Too many startups fall victim to trying to ‘hack’ growth, rather than setting up solid processes and systems to grow sustainably over time. 

Experience shows us that, realistically, founders have about the same chance of ‘hacking’ growth in a short period of time, as they do in going from post-Christmas Santa body to ripped 6-pack adonis in the short time before they cancel their new, expensive gym membership.

So here are some tips for how to start of the new year -- and decade -- in the right way, and develop solid processes and infrastructures that will drive real growth over time: 

Slow and steady wins the race.

The reality is that growth hacks are the January gym deal of the startup world, designed to pull people in at times of weakness. While they sound exciting, seemingly offer short-term gains, and allow us to post self-congratulatory social media posts about ‘killing it’ (fire emoji), the real likelihood is that after blasting through time, money and resources, founders will find themselves back in the same shape as they were on January 1. 

Whether it be in getting fit, giving up smoking, or scaling a startup, the reality is there is no quick fix. Making real progress means playing the long game. For any viral growth to truly be sustainable, you have to start slow and steady to avoid collapsing under your own weight. That might sound boring, but imagine this:

Imagine you are riding a bicycle in top gear. You’re speeding along with minimal effort. Until you reach the first real incline - that steep hill is your business growing, and the increased operational demand that comes with it. It won’t take long before you burn out or grind to a halt. And the same thing will happen to your business. If you’re in the wrong gear, then let's face it: you won’t have the stamina to handle the pace. 

Unfortunately, many startups embrace this way of working because business growth is seen as “the grind” and the crazy startup culture around this is accepted. Nobody seems to ask:

Is this actually the right way to grow?

It's like spinning as many plates as you possibly can. Sure you might be able to change the plates but you are always spinning the same maximum number. The only way you can spin more is to burn through more resources, either by onboarding more staff, buying expensive new software, or signing up for the expensive webinar or course of a new growth hacker. 

If increasing your capacity means dramatically increasing outgoings, founders need to question whether their business is really growing in a sustainable manner.

Create a three-year plan, rather than a three-month plan.

If your startup is ever to reach the holy grail of viral growth, your team needs to spend time building infrastructure and operations capable for handling it. We recommend that instead of jumping headfirst into any new hacks or strategies, startups create a longer, three-year strategy:

Year 1

The first step should be to get the basic infrastructure in order, by refining your targeting and non-scalable activities. 

Rather than focusing on that first million, start by breaking even. Find solutions to make your product unique and accessible. Remember to regularly review your product as it matures, and consider how it applies to specific users. 

Following these steps will enable you to be financially stable, in the strongest position to demonstrate traction, a proven audience, and solid marketing and sales processes that are likely to catch the interest of potential investors. 

Year 2

Moving into year two, lean on data to polish off your infrastructure and messaging. By the end of this year, you should be in a strong position after having pressure tested your internal processes to see how they stand up to the strains of medium-pace growth. 

With a whole year’s worth of data under the belt, now is the time to start running conversion rate optimization (CRO) tests, with a view of implementing the scalable acquisition of new customers. Try out tactics like search engine ads, social media paid ads, or personalized LinkedIn messages to particular team members at target organizations, and see which get the most traction. 

Focusing on different scalable acquisition strategies allows you to highlight which strategies have worked best for you in the past, and analyze which new strategies might work in the future, putting you in a very strong position to hit maximum acceleration in year 3.

Year 3

If you have played your cards right, a full year of scalable acquisition and CRO testing should have brought your company closer to hitting hockey stick growth. 

At this point, it would be advisable to shift your focus from CRO to growth strategies. Focus your growth teams on product usage, retention, and sales. These are areas CRO is not typically applied to. Ask yourself the following questions: 

Onboarding of your software product:

• Where are the constraints, can you improve them? 

• Can you improve the % of people making it through onboarding, and how can you do that? 

Sales

• How long do people spend in each stage of your pipeline? 

• Why do they spend this long? Can you make it shorter? 

• Do different deal sizes spend different amounts of time, i.e. enterprise vs mid market? 

• Could you break out your reporting? 

• Could you look at the main sticking points by speaking to your sales team, then test changes that may solve these problems?

Retention

• How do you want people to use your product? Is it daily, weekly, monthly, or even yearly? 

• Look at the people who are using the product in a desired way (power users) vs those who do not. 

• Are there any similarities or differences in their profile? Did they use certain features at certain times? 

Look to create an understanding of all the similarities and differences between the ways different users are interacting with your product/service. Then use this to create hypotheses that you can test. 

For example, should you prompt specific features to people? Should you use push notifications or emails at specific times when you know people are most likely to fall off? Should you have live chat support appear at these critical times? Use this information to stack the odds in your favour and make the desirable outcome more likely. 

By switching your CRO teams to growth teams and focusing across the business in its entirety, you will be able to apply the same constant improvement methodology that delivers viral growth to your entire businesses. This wider focus will enable your business to continue improving, growing, and stay ahead of the competition. 

Summing up 

As we enter a new year and decade, it is important that founders take a step back and consider the fact only 10% of startups will make it to their fifth year. If a startup fits the criteria of having a clear product-market fit as well as being capable of serving that market at scale, then there is no reason why the company should not reach viral growth. However, the startup will need to survive long enough to do so. 

In the same way as weight lifters at the gym gradually increase their weights over time, and people generally aim first for a 5K before signing up for a marathon, to maximize a startup's chances of success and survival, founders should focus on achieving continuous, gradual improvements that you can definitely achieve.

This original guest post was written by Dan Wheatley, co-founder of StraightTalk Consulting, a SAAS operations and growth consultancy which works with founders to implement data-driven growth strategies. 

Graduates of the Founder Institute are creating some of the world's fastest growing startups, having raised over $1.75BN in funding, and building products people love across over 200 cities worldwide.

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