Why right now might actually be the ideal time to start a business
If you’re telling yourself that right now is not the ideal time to start a business and turn that solid idea into a reality, then you need to read this.
At no point in recent history has the tap of entrepreneurial ideas been completely turned off.
Even in times of uncertainty or economic crisis, the spark of an irresistible idea can burn bright. Indeed, it’s often these challenges that plant the seed for a great idea. Necessity is the mother of invention, and nowhere is this truer than in the startup landscape.
If you’re telling yourself that right now is the wrong time to turn that solid business idea into a reality, then listen up. The truth is that with the right strategy, realistic valuations and approach to resourcing, you can still build a business in the current climate worthy of attracting both talent and funding. Here’s how.
Accept that times have changed
The year 2021 will go down in history as one of the best times for Australian startups. The startup ecosystem was given a healthy boost as ideas flourished and funding flowed freely, with investment in local firms tripling to reach $ 10 billion, making it a record-breaking year.
While many made hay while the funding sun shone, we need to accept that times have changed. But that doesn’t mean accessing funding is impossible.
For example, in Victoria, VC investment has gone back to 2018 levels with $ 668 million in VC investment raised in 2023. Yes, startup investment is down, but it remains significant. And in 2023, the value of Victoria’s startup ecosystem jumped to more than $ 103 billion, so while VC funding is slowing down, the value of the market is still growing.
Instead of despairing at the doom and gloom narrative, look for the silver lining.
Be prepared to bootstrap
In the current climate, you’ll need to believe in your idea enough that you’re willing to bootstrap it, but this doesn’t mean taking a reckless approach. If anything, bootstrapping is a great way to think about every dollar coming into and out of your business, as ideally that money is the hard-won revenue you’re generating.
The positives of bootstrapping are that you can prioritise growth on your own terms and take the lead on decision-making and culture-building, without being influenced by funders with deep pockets.
Focus on building sustainably with financial integrity, but also design a clear pathway to achieving cash positivity, so that when you’re ready to speak to potential investors, you have a compelling story to tell.
Share your growth narrative
A wing and a prayer isn’t going to cut it for your startup strategy.
If you want to attract the right kind of attention, the key is to articulate your growth narrative clearly — for potential investors and potential employees. They need to know that you believe in your business’s growth potential and you’ve done your due diligence in creating a robust and achievable plan.
As noted by Amanda Price, head of High Growth Ventures at KPMG, in the recently released State of Australian Startup Funding Report: “VCs are inherently a vehicle to fund abnormal growth, but in 2024, that abnormal growth needs to be demonstrated with sophisticated financial models grounded in sound reasoning and derived from insights, not ideas”.
So be sure to communicate clearly that you can see a stable path between where you are, and where you want to be so potential investors and employees know you have a rigorous process informing your present and future decision-making.
Confidence comes from having a proposal that you can defend under close scrutiny.
Prioritise your people
In recent years, many corporate employees left their secure roles to take a chance on a startup, often attracted by company options as part of their packages. But the decline in valuations means these options are underwater now — and might never be worth anything.
It’s not impossible now to attract highly skilled corporate talent to your startup, but you need to do so with something concrete. If they’re going to jump ship, they’ll be looking for solid financial rewards and clear progression pathways — the kind that wouldn’t be offered to them within the constraints of their current employer.
Prioritise finding the right people and making a role with your startup an attractive prospect.
This may include articulating value beyond a dollar figure. For example, work-life balance is a key consideration for almost all workers in Australia according to Seek, and the option to work from home or remotely is a ‘must-have’ for 27% of candidates.
Workplace culture is also a critical factor for 73% of Australians, so spell out the benefits and experience of your workplace to potential employees, as this might factor into their decision-making.
It’s challenging, but not impossible
Starting a business in the current climate comes with challenges, but with the right proposition, you can still do great things in the startup sector.
While the unicorns might be fewer and further between, investors are still interested in businesses with a solid case and a strong pool of talent behind them. If that business idea is keeping you awake at night, now might be the time to take a carefully considered chance on your startup dream.
Jarrad Skeen is the founder of Affix.
