How to make the most of start-up equity

Congratulations! You’ve secured capital for your business baby. You’ve been dreaming of this day – perhaps for years – and finally, you’re making your dreams a reality. The trick now is to make the most of your start-up equity.

Congratulations! You’ve secured capital for your business baby. You’ve been dreaming of this day – perhaps for years – and finally, you’re making your dreams a reality. The trick now is to make the most of your start-up equity.

You’ve got your branding and your website. You’re on Facebook, LinkedIn, Instagram, Twitter, Tik Tok, and YouTube. Now what?

This is where the rubber hits the road, and I’ve watched too many people starting in business fall into the trap of feeling cashed up. You can spend your start-up equity on a million things; business cards, magnet signage, equipment, and maybe even a new vehicle. All of it is justified and probably needed…at some point.

And that’s the point. You need to know when to spend and what to spend on. Ignorance may feel like bliss, but it will be cold comfort when you need to invest later. So get strategic with your capital from the outset.

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The Small Business Nation

Australia’s called “the small business nation”, with 88% of all businesses employing 1-4 people.

According to McCrindle Research, “small businesses continue to dominate the Australian economy, with 99.8% of all Australian businesses considered small to medium enterprises. Three in five businesses (62%) are non-employing, with 98% of all Australian businesses employing less than 20 people.”

And the reality is that almost 50% of start-ups fail to thrive and close down within five years.

Not to scare you, but the bottom line for anyone starting a business is that many people already do what you’re doing. So why would people use your service or buy your product? What sets you apart?

And a hint—it’s not because you give everyone branded mugs and USB sticks.

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It's all about your USP

Before you go out and blow your cash on incidental marketing gifts for potential clients, make sure you know what makes you different from your competitors. What do you bring to the table? What’s your Unique Sales Proposition (USP) or selling point?

Another hint—it needs to be more than “we provide exceptional service.”

Why did you go into business? Hopefully, it wasn’t to make your first million while living the good life because, trust me, there are more secure and far less stressful ways to make money!

So, what’s your USP? What inspired you to take the plunge? Who are your ideal clients, and why would they engage with your service or product over others? And before you start listing the features and benefits of your services and products, consider this,

"People don't buy what you do; they buy why you do it."

Why do you do what you do? People want to buy into a vision of something bigger than themselves. 

Take thankyou, for example. This Aussie company started with bottled water and now makes a range of quality products, none of which are new to the market. What sets them apart is why they do what they do.

"Our mission; amplifying impactful change-makers to better serve people living in extreme poverty by redistributing wealth from consumer spending. And we need your help."

People purchase their products because they support the why of thankyou. They believe in the vision, so they invest by using their purchasing power to put their money where their mouth is.

Your why may not be as altruistic as thankyou, but the principle still applies. People will engage with you because you stand for something. It may be inspirational or aspirational, but it will involve a clearly communicated why that delivers added value to your clients.

"A good story makes you feel something and is universal. They want to grasp your values and your commitment to excellence; be inspired and intrigued. Storytelling is the most powerful way to convey these ideas."

Make sure spending is a genuine value-add for customers

Before you splash your start-up equity, do your research and find out what your ideal client really wants. Say, for example, you offer high-quality, hand-sewn leather satchels. Your customers will likely be more interested in ethically sourced, well-made products and less concerned with you providing “free shipping”. In this case, including a complimentary sample of a leather conditioner may be a genuine value-add, telling the story of your commitment to the customer and product.

Do one thing well

If you’re going to make the most of the starting capital for your business, be clear on what you do and why you do it.

You’re better off focussing on one thing and doing that better than your competitors rather than throwing your money at a bunch of products or services.

"Do not try to do everything. Do one thing well"

Spend money on doing your one thing well. Do this, and allocating funds will become an easy decision. Your focus will automatically be on adding value for your clients.

Tell your story

If you’re going to spend money on marketing, invest wisely. Great marketing takes time and money, and if you spend your start-up cash on gimmicks that don’t tell the story of your business or present your why, you’ll end up at the back of the pack.

Remember, your why is your USP, the one thing you do better and the story behind it.

"Marketing is no longer just about the stuff you make...it's about the story you tell."

If you’re going to spend money on marketing, invest wisely. Great marketing takes time and money, and if you spend your start-up cash on gimmicks that don’t tell the story of your business or present your why, you’ll end up at the back of the pack.

Remember, your why is your USP, the one thing you do better and the story behind it.

Make start-up equity work for you

Ultimately, it’s about making your cash work for you in the long run. So if you want to be in business five years from now, exercise wisdom and restraint and resist the urge to spend money on things that look good but don’t add value to those you serve.

andee-sellman-author

Andee Sellman

Andee Sellman is the Founder of Rest & Rhythm and is dedicated to helping people discover their unique rest and rhythm personally and professionally.

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