The aura surrounding a startup in contracting is buzzing with potential, excitement, and momentum. Finding yourself in one is like setting things into warp drive. The time it takes between idea and conception goes so fast that before you know it you’re no longer buzzing but facing very harsh realities about what the future holds and how the startup is going to handle the growing pains associated with its increased popularity.
If you’re too wrapped up with the initial excitement and get caught up in the speed of development then you could pass those moments that are crucial to the longevity of the startup. The startup falls into the perpetual cycle of hitting barriers put in place by this rapid growth.
The following are some of those common growing pains a startup may face so that you may get a better idea of what to expect and how to dodge the crud if it’s about to hit the fan.
- Scope Creep
The early days means that every idea is technically viable for the offering because it’s still very flexible and there will be a lot of input from all those participating.
However, it’s very easy to get stuck in a perpetual cycle of scope creep, which makes the startup miss deadlines time and time again because so much is being tacked on rather than “getting it good”, releasing it to the public, and making the necessary updates after feedback.
Scope creep will generally be the first major barrier to growth so make sure the team understands the deadlines and have a detailed outline of what needs to be done (that nothing else can be added until the project has reached completion).
- Expanding Too Quickly
Being in the position of a contractor means that a lot of jobs will begin pouring your way if you’re doing the right amount of networking, advertising, and marketing. Before long you realize that the only way you’ll be able to keep up with the demand is by taking on new help but because the demand is so heavy you may hire too quickly and make serious mistakes:
- You may not have screened the individuals stringently enough and turns out they do not actually have their certifications
- You hadn’t planned the increased importance of legality and such items as insurance for the new help (or even the additional equipment you’ve taken on)
- You don’t have enough time to build a quality team that is built on solid communication thus pitting individuals that may have quarrels with one another (potentially slowing down projects)
Just remember to take your time when you are expanding, even if this demand is starting to become crucial. Take the time to really get to know the individual you may be taking on to ensure they have the right skills and qualifications to do a good job. Cover the legal side of things by doing your research and working with a business that handles such things as general liability and usage of equipment. Look for online quotes. Many companies, Target Insurance Services being one, offer free quotes on general liability, workers comp, commercial auto, and bonds.
Ensure that the help you are bringing on are able to work with one another and be ready to switch up the teams if there are issues in communication.
- Failing to Raise Capital
Even a great idea is worthless without taking action and even then you need working capital to get the ball moving because there are many cogs in the machine:
- Equipment purchases (or rentals)
- Permits & training
- Marketing & advertising
- Management & human resources
- Adequate cash flow for the early stages
The money is there for you as a contractor but it’s not going to come through if there isn’t enough initial capital to make it happen. You do have the option to take out a line of credit from a local bank or go the route of funding the startup through personal credit. Either way it needs to be there otherwise your new business is just making empty promises.
Get out there and network the best you can, talk to the financial institutions, understand the potential scams, and be persistent. Raising capital will be just as hard as the actual work involved with the business so place just as much time and effort into getting it secured.
There will be some pain but ultimately there will be gain. Take these items into consideration and keep them in check so those growing pains aren’t as rough as they could be.