Often companies communicate to the outside world via their PR-responsible. We, as a start-up company, want to do something different by putting our employees in the picture and asking them for their insights on company specific and tech industry related topics.
One of the key people in a company is the financial responsible. Balances must be up-to-date, budgets must be calculated. In our company, iN2POWER, Alain is the man we can count on.
This week Alain provides us with some insights about financial aspects in the tech industry and financial challenges in start-up companies.
ROBOTS VS PEOPLE – FINANCIAL GAINS?
A frequent argument made is that robots usually are more efficient than people, and that thanks to implementing robots and minimizing the number of employees labor costs will be reduced. However, the question remains if this will financially benefit companies. Alain is quite skeptical about this statement and emphasizes that it can only be efficient when production numbers are high. Robots might be more efficient, but there are also certain investment costs and maintenance costs to be paid. We must admit that robots are expected to make less mistakes, operate at a higher pace and be the optimal solution for repeatable tasks. One thing is certain, robots must perform better compared to people in order to replace them on the floor.
FIRST START-UP PHASES
Alain has witnessed the first start-up phases of iN2POWER and gives some financial recommendations for start-up companies in general. Starting up a company will probably never be go as smoothly as you would like, but by assuring that the following aspects are fulfilled it will go a little easier.
First of all, it is important to determine some KPIs (Key Performance Indicators) before you launch the company. KPIs will keep you focused and will determine whether or not you are on the right track. The KPIs should be realistic, and be an indicator of what is going great or where attention is needed. Writing all these KPIs and analysis down in reports will give the company a clear overview and will provide insights that might otherwise be overlooked.
Another key aspect is writing out a business plan, and following the guidelines as closely as possible. Once the company is launched, many unexpected issues and opportunities will occur and you’ll feel the need to react. However, when you get distracted from the original plan and start to move in all kinds of directions, it will eventually go wrong. There is a reason why experts, investors, partners are mostly focusing on business plans. They want to know where you are heading, what the opportunities are, and what the risks could be during the journey.
Thirdly, start-ups should gather financial resources to make it even possible to launch the company. For this matter, meeting with banks is an essential task. By creating trust between the bank and the company, providing them with the business plan and assurance for repayment, might give you a chance at receiving funds.
Last but not least, it is essential to employ (trained) sales people. They are the ones that should sell the products and sell the idea to potential customers. They need to create trust and assurance that the customer will get value for money. Creating products and running the company is one thing, but selling is another.
5 THINGS TO CONSIDER TO INCREASE THE CHANCES OF SUCCESS
The tech industry is rapidly changing and is rather tricky to get involved in. When asking Alain whether or not he thinks it is a good idea for young entrepreneurs with little or no experience to launch a start-up in the tech industry, he shakes his head. However, it might not seem the best thing to do, but that doesn’t mean that it will fail. Alain listed 5 things to consider to increase the chances of success:
First of all, checking with an experienced high tech industrial office to see whether or not there is a demand for the product (Market research). Try to learn from their experience, and see it as a coaching session. Sometimes, if there is no one with experience in-house, it is better to broaden your insights by asking third parties for help.
Secondly, follow specific courses related to research & development, and trainings on specific R&D issues. This way you make sure to understand the process and what the possibilities and limits are.
Thirdly, make sure to know who your competitors are, what kinds of products they offer and who their target group is. Possibly you can produce similar products with upgraded features, like higher efficiency.
Further, to enhance or increase the market share, the best option is to look for a high tech salesman who knows the market and who can tackle customer demand immediately. Young entrepreneurs will learn a lot from experienced people, and will generate better insights.
Finally, as mentioned before, preparing a clear and realistic business plan is key for convincing banks or other institutions to provide grants. Without working capital and sales, you will never make it.
There is no right or wrong in launching a start-up company, but following some guidelines might make to road to success a little easier.