Lessons from a Year of Startup Consulting

In the past few months I have advised a number of startups on topics such as financing, growth strategies and operations. In this blog post I share my three most important learnings from startup consulting.

The KPIs are crucial

For an eCommerce startup, I prepared the pitch for a financing round together with the founders. We invested a lot of time so that the pitch follows a good story, is informative yet short, and also doesn't neglect the design. It quickly became clear that the KPIs are crucial: financing can only be achieved if the key figures can withstand critical scrutiny by competent investors.

That's why we worked intensively on selecting the relevant KPIs and the time windows considered. Even in the best eCommerce startup, not all metrics are always rosy. That’s why the correct preparation of the KPI is crucial. It's not about that cheap graphical trickery , but rather about telling a coherent story through the correct arrangement of the diagrams in order to explain peaks or temporary sags.

The financials have to be right

As a startup consultant, I supported an online shop for a while, for which I also revised the financial plan. For this purpose, we created a completely new Excel sheet that is based on the funnels of the shop. Even if eCommerce is a business model that is easy to understand, it is extremely worthwhile to recreate the business exactly in the financial plan in order to identify adjustments for optimization, simulate changes to it and ultimately correct them. This is why I never use financial plan templates. Templates make it easier to get started, but they get in the way of understanding the context. In addition, sooner or later adjustments will have to be made anyway, which can be very tedious.

If you work on the details in Excel for too long, you run the risk of losing track. It is therefore important to regularly check the balance sheet, income statement and cash flow statement for irregularities. Nothing is more embarrassing than the investor asking why labor costs are lower in December than in November (the formula pointed to the wrong cell).

The team must know the numbers in their sleep, so that detailed questions can be answered by experienced investors. Good business angels are familiar with the matter, have perhaps already had a startup in a similar area, and mainly check the financials for plausibility. Can the conversion really be as high as assumed in the financial plan? Are the fulfillment costs realistic? Can the startup really grow that quickly? Anyone who doesn't have an answer to such questions shows that they don't understand their own business.

Professionalization of marketing

At one of the eCommerce companies that I advised as part of my startup consulting, the conversion rate was only partially satisfactory. The aim was to find the reasons for this and take appropriate measures.

Until now, the startup had managed the Facebook and Adwords campaigns on its own. This can work, but you quickly reach its limits: the configuration options are too complex, maintaining the campaigns is very time-consuming and the right channels have to be found. In order to be able to use the budget really efficiently, you need a person who has intensively studied the advertising platforms. With the right campaign configuration, costs can be optimized, and ongoing tests with different ads can be used to learn which forms of advertising work.

The design of the shop also needs to be continuously optimized. For example, A/B testing can be used to find the right menu or the best color for the “Add to Cart” button. Many startups underestimate the impact and significance of such A/B tests and often do not have the time or the necessary knowledge to correctly interpret the data. It can pay to work with an outside expert to make data-driven design decisions.

At this eCommerce startup, we were able to significantly increase conversion through more efficient performance marketing, for which we temporarily brought in a specialist, and A/B tests.

Consulting for your startup

I would be happy to take time for your internet startup and analyze together with you where there are opportunities for optimization. Are you looking for capital for your startup? Do you need a new investor pitch? Do you need feedback on your business idea or business plan? Then I look forward to your message!