With our company’s one year anniversary just around the corner, I wanted to take a moment to reflect on our startup year. As I think back, I truly am amazed and humbled at the progress we made over the course of that first year. The success* we have enjoyed is a sum of decisions and small victories that have built what Cultiv8 is today. A few of these victories were of our own doing and others were from the supportive community around us.
*I realize success can mean different things to different people. It can be especially different if you’re a startup. For many entrepreneurs, success is breaking even or taking home that first paycheck.
Though there are many things that contributed to our success, I’d like to highlight key things I believe were most instrumental in to our successful first year; in hopes that they may inspire other entrepreneurs or aspiring entrepreneurs.
Worked on the Business Before Working to Get Business
Before we actively started seeking clients, we made a decision to dedicate time to our internal processes and documentation. We wanted to ensure that when we signed our first client that we were able to respond in a way that was timely and seamless. In the weeks leading up to our launch we focused on outlining our pricing structure, designing proposal templates for different services, setting up Quickbooks, and developing client contracts. By working on the business first, we freed up time to focus on growing the business and serving our new clients after launch.
Put the Proper Legal Measures in Place Pre-Launch
In addition to registering our LLC, we took additional steps to protect the business in the form of contracts (operations and project/retainer agreements) and insurance (liability and life). I realize this doesn’t seem like it would contribute to the success of the business, but there is a confidence and security that comes with knowing that 1) there are checks and balances in place, and 2) that you have financial support in case of a lawsuit or the death of a partner. For a more comprehensive outlook, read our blog post The Tools You Need to Protect Your Business.
Outlined a Budget
Looking back now, it’s a little surreal because outlining our budget was the first thing we did for Cultiv8. We started by making a running list of all of our needs (email, web hosting, liability insurance, etc). We could have easily gone with typical choices for all of these, but we didn’t. We compared services that could meet multiple needs simultaneously to prevent excess overhead. We looked at each applications reliability, scalability, and cost. We asked questions like “Will we outgrow this in a year? If yes, then how much time is it going to cost us to convert to another system?”. Sometimes the effort to change systems wasn’t worth the difference in price, and sometimes the most economical option did the job perfectly. Ultimately, we composed a comprehensive list that 1) met our current needs, 2) would meet our needs in 2+ years, and 3) was cost conscious.
Raised and set aside six months of overhead
Once our budget was established, we worked together to raise enough funds for six months of overhead, before opening the business. This is not to say that you need six months worth, it’s about choosing an amount that you feel comfortable maintaining until your business begins to generate revenue. Having six months of company bills in the bank did a couple of things for us, 1) it gave us time for growth to happen naturally and 2) allowed us the flexibility to reach out to the types of clients and projects that we wanted most. During the first couple of months our projects and revenue were sporadic, but we never worried about paying our bills because of our nest egg. In all honesty, we did not take home our first paycheck until month 3 of business.
Set Realistic Revenue Goals for Year One
When setting revenue goals it’s important to find the balance between motivating growth and fostering moral. As a startup it’s easy to lose perspective and get discouraged – remember a successful month for you is different than a seasoned business. In order to find this balance, we began by determining our max capacity.
Max Capacity = ((Working Hours – PTO) x Percentage of Billable Time) / 12
Once we had this number, we decided what portion of our capacity we felt we could reach by the end of year one and set that as our goal for month twelve. We then approached the rest of the year similar to someone training for a 5K. We outlined slow increasing increments that spanned multiple months and eventually built up to the goal we set for month twelve. The total of all of the monthly goals then became our goal for year 1.Example of growth pattern:
Leveraged Our Personal Brands
When we launched our company, we created this new brand that had yet to prove itself. It didn’t have history or name recognition. People couldn’t associate it with a good or bad customer experience. Ultimately, Cultiv8 didn’t carry any weight. What did carry weight was the past experiences that Caitlin and I had had with classmates, clients from previous jobs, and professional colleagues. Through the good experiences and quality work we had provided to others throughout the years, we were able to form a lasting impression around our personal brand. So although no one knew our business, they knew us as designers, as developers, as individuals, and that recognition provided a gateway to generating clients for our startup.
Remained Open to New Lines of Business
When we launched Cultiv8 our goal was to be a boutique digital design agency working with B2C companies. After being in business for a few months, we were approached by a content marketing firm who was looking for a partner to collaborate on print and web design. This B2B approach wasn’t something that we had ever considered before, but it fell within our mission of building long term relationships so we agreed to take on a test project. The project turned out wonderful and we enjoyed the opportunity to collaborate with industry experts. Needless to say that project led to more projects, which then led us to find other agency partners. Fast-forward to February of 2018 (just 6 months in), we re-launched our website highlighting partnerships as the core of our business. Looking back, I realize how much of a game changer that test project was for us. If we hadn’t been open to expanding our business into partnership services (currently the largest segment of our business), we wouldn’t have grown as much as we did in that first year.
Formed a Company Mission
A company mission may sound old school in this day and age. But regardless of how big or small your business is, you must have a purpose behind why you do what you do. For us, our mission provides a guiding force behind how we run our day-to-day operations and the goals we are striving to achieve. Our mission is composed of two parts, a desire to give back to the community and a desire to cultivate lasting relationships. First and foremost, we put a high value on every potential and current client relationship we build. Secondly, we give back to the community or to organizations who share a similar value by donating a percentage of our profits each year. Whether we’re in year 10 or year 1 of business, this is and will always be our mission.
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If you’re thinking about starting a company or have just started a company, we hope the short list above can provide some benefit. If you have questions or want to share your startup success story/tips, feel free to drop us a line.