How to know if your start-up is destined for success

Three simple acid tests to find out if your business is on the right track when it comes to money, people and your company culture

It doesn’t take much to do an acid test of any start-up company.

Tell me about the first five employees you hired and I’ll tell you your company’s fate. Tell me about the expenditure with those first five employees and I’ll tell you if you will ever make a profit. And tell me what time your employees come in to work and go home from work, and I’ll tell you exactly what the company morale is like…

Profit, the right people and a good company culture are integral to any start-up’s success and if you use these three simple acid tests you can make sure you get it right from the offset.  Plus, you can refer back to them from time to time to check you’re still on the right track.

Acid test 1: The money

Lots of start-ups have a fuzzy vision that smaller scale setup is proportionally more expensive than a larger scale setup. There is a misconception in the market that as you grow, your per-employee expense decreases. Let’s get this straight – the truth is exactly the opposite of that! Keep a close tap on your money, and keep the spending down right from the beginning.

A simple acid test is to take your total cost and divide it by your key indicators. For example: If you’re a website that will grow if your user base grows – then divide your total costs by number of users – now you know how much you’re spending per user – this figure can only decrease if your user base grows faster than the costs.

So, you managed to close a big round of funding? That doesn’t mean that you should go out and lease fancy offices or hire 20 extra staff! Keep it to the bare minimum, and do the acid test to see where you are vs. where you really want to be!

Acid Test 2: The people

You’re going to need rock stars to work for you. I don’t literally mean rock stars, but I mean people with a rock star attitude – the attitude of doing things for the love of it – and not just for the money. Your first five employees need to be exactly that.

Well, this is probably your biggest challenge as a start-up. Recruitment companies will charge you an arm and a leg to get you those rock stars and you will simply get lost in the crowd if you go to a place like monster and post your job ad .

So how do you find stellar employees?

A simple acid test here is to see how many outside work references you can find for your potential new employee. Do they have a blog where they exhale that creative talent? Are they a part of some community or a club relating to a technical subject? Do they have a strong web presence?

You’re looking for staff that will go above and beyond the necessities of their roles and finding people who have way more than just a CV as a reference point can be a great indicator that they’re proactive go-getters.

Obviously the standard essentials are also important, education, relevant experience etc. but this acid test helps you find people that are extra special.

Acid Test 3: The culture

I am a strong believer of flexibility. I have worked at some super large companies where people rock into work no earlier than 10.30am and they manage to deliver multi-million pound projects. However, there is a fine line between flexibility and ignorance.

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For your rock stars to stay with you, you need to create a thriving and open culture in your company. You need to have your office represent a creative heaven. Most importantly, you need your employees to both want to come to work and to work extremely hard when they get there.

There are a hundred and one effective ways of creating that sort of environment, from relatively cheap freebies such as fresh fruit in the office to offering a Google style dedicated time for employees to work on individual projects they enjoy or if you want to go all out – a company slide! But what we’re looking at here is how to test whether you’ve actually achieved it.

A simple acid test in this instance is to invite your employees for a pint of beer after work – see how many people show up and how long they stay for.

When last orders are called and most of your staff are still there enjoying themselves, you know you’re doing something right…

These little acid tests are a great way to do a quick check on the basic essentials you should be keeping an eye on in your company.

Of course, one of the most important checks you need to do is on yourself, and your skills as a leader, but that’s a whole other blog post…

Saurabh is the CEO & co-founder of Seed Recruit, an online recruitment platform. You can get in touch with Saurabh on Twitter @_SaurabhKhanna or on LinkedIn at www.linkedin.com/in/saurabhk01

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