The best founders are masters of both grit and strategy. While they wear pretty much every hat and push through countless setbacks to build their businesses, they also know that sustainable success means working smarter, not just harder. It's the 90/10 rule in action: achieving 90% of your goals with just 10% of the effort — if you know where to focus.
That's why we turned to the experts. As the financial partner to one in three venture-backed startups in the US, Brex has a unique view into founders' journeys. While we help simplify their financial operations with integrated card, banking, expense, and bill pay solutions, we see firsthand how they tackle challenges across every aspect of company building. So, we asked them to share their best advice for building a successful startup.
We've distilled their hard-won insights into 20 actionable tips covering everything from validating your concept and raising money to building your team and scaling operations. Their answers make it clear that every path is different, but some success patterns kept popping up:
Ultimately, in today's world of AI innovation and global remote teams, building a sustainable company requires more than a big idea and hustle. The real key is knowing where to focus your time and energy. Whether you're just beginning to sketch out your idea or you're in the thick of building the company, read on to get real advice for startup success.
startup-fundraising
startup-fundraising
Understanding your startup
To effectively pitch your startup, you must have a deep understanding of its core elements. Start by clearly articulating the unique value your startup offers to customers. This value proposition should be concise, compelling, and easy for potential investors to grasp. Next, define your ideal customer segment and their specific pain points. Investors want to see that you have a clear understanding of who your target market is and why they need your product or service. Analyze your competitors thoroughly and identify your competitive advantage. Be prepared to discuss how your startup stands out in the market and why customers would choose your offering over alternatives. This analysis should naturally lead to developing realistic financial models, including revenue forecasts, expenses, and profitability projections. These financial projections should be closely tied to your startup budget. Be prepared to walk investors through your startup budget, explaining key assumptions and how you plan to allocate funds. A detailed and thoughtful budget can significantly boost investor confidence in your financial management skills. Researching potential investors
With a solid grasp of your startup's fundamentals, turn your attention to identifying relevant investors. Use online databases, industry networks, and referrals to find investors interested in your sector and with a history of investing in similar startups. As you compile your list, analyze each investor's criteria and preferences. Understanding their investment thesis, preferred deal size, and typical investment stage will help you tailor your pitch effectively. Go beyond basic research to understand the typical expectations of investors in your industry. Familiarize yourself with common benchmarks for return on investment (ROI) and exit strategies. This knowledge will help you align your pitch with investor goals and demonstrate that you've considered their long-term interests. Crafting a compelling pitch deck
Armed with a deep understanding of your startup and potential investors, craft a compelling pitch deck. Include essential slides that cover key aspects of your startup, such as the problem you're solving, your solution, market opportunity, team qualifications, traction to date, financial projections, and your specific fundraising request. As you develop these slides, focus on creating a narrative that conveys your startup's vision and passion. Make your pitch deck visually appealing with high-quality images, graphs, and charts. A well-designed deck will keep investors engaged and make complex information easier to digest. Remember, your pitch deck is often your first impression, so ensure it reflects the professionalism and potential of your startup. Practice, practice, practice
With your pitch deck ready, it's time to refine your delivery. Rehearse your pitch multiple times to improve your delivery and boost your confidence. Practice in various settings — in front of a mirror, with friends, or even recording yourself to identify areas for improvement.
business-startup-costs
business-startup-costs
Cost-saving strategies that can reduce your startup costs
Whether you're bootstrapping or deeply engaged in startup fundraising, implementing cost-saving strategies can help you make the most of your available capital. Here are a few practical strategies that can help trim your startup costs without compromising on quality or productivity.
Many essential business functions can be managed using free or low-cost software alternatives. For example, use Google Workspace for email and document management, Canva for basic graphic design, and Wave for accounting. Open-source software can often replace expensive proprietary solutions for tasks like project management or customer relationship management. By thoroughly vetting these free or low-cost options, startups can reduce their foundational technology expenses while enhancing productivity and efficiency.
Opting for a remote work model is a good way to reduce overhead costs associated with office space and utilities. Virtual office services can provide a professional business address and mail handling at a fraction of the cost of a physical office. This approach also expands your potential talent pool, allowing you to hire skilled workers no matter where they are. Additionally, studies show that remote work can lead to increased employee satisfaction and productivity, further benefiting your startup.
Outsourcing essential but non-core work, especially finance, is a pretty standard move in the startup world. Functions like bookkeeping, IT support, or customer service. Outsourcing gets you access to specialized expertise without the cost of full-time employees and associated benefits. It also provides flexibility, allowing you to scale services up or down based on your needs and budget.
Approach your suppliers and service providers to see whether prices and terms are up for negotiations. Many vendors are willing to offer discounts for long-term commitments or bulk purchases. Consider proposing alternative payment terms, such as deferred payments or installment plans, to help with cash flow management. Building strong relationships with your suppliers now can lead to better prices and more favorable terms down the road.
Co-working spaces like WeWork and Serendipity Labs are a cost-effective alternative to traditional office leases, especially for small teams. These spaces often provide high-speed internet, printing services, and meeting rooms at a fraction of the cost of standalone office space. Co-working environments also offer networking opportunities and potential collaborations with other founders and startup employees. As your business grows, you can adapt your space needs without being locked into a long-term lease.
startup-fundraising
startup-fundraising
When should my startup raise money?
The timing of fundraising can significantly impact your venture's trajectory. Several indicators suggest your startup might be ready for external funding. These include significant growth potential with a clear path to scaling, demonstrable market traction with a growing customer base, a solid team capable of executing your vision, a validated business model with consistent sales, and a specific plan for utilizing additional capital.
It's important to be cautious about raising funds too early. Premature fundraising can lead to excessive dilution of ownership and create unrealistic investor expectations, potentially putting undue pressure on your young company. The risks of early fundraising should be carefully weighed against the potential benefits of additional capital.
The optimal timing for fundraising often depends on factors such as current market conditions, industry trends, your startup's stage of development, available startup runway, and the competitive landscape. Ideally, you should seek funding when you can demonstrate tangible progress and a clear path to future growth, but before you're in desperate need of cash. This position of strength will allow you to negotiate better terms and attract high-quality investors who can truly add value to your startup journey. Remember, the goal is not just to secure funds, but to find the right partners at the right time to propel your startup forward.
Once you've determined the right time to seek funding, the next critical question is how much capital to pursue. The amount you raise can significantly impact your startup's trajectory, so it's essential to approach this decision thoughtfully.
startup-fundraising
startup-fundraising
How much funding should I raise for my startup? Once you've determined that it's the right time to raise funds, it’s time to decide how much to raise. The amount of funding you should seek is closely tied to your startup's specific needs, growth plans, and current stage. A common rule of thumb is to raise enough capital to give your startup 12-18 months of runway. This time frame typically allows you to achieve significant milestones and position yourself for the next round of funding or profitability. To calculate this base amount, multiply your monthly burn rate (total monthly expenses) by the number of months of runway you're targeting. For instance, if your monthly burn rate is $50,000 and you're aiming for 18 months of runway, your baseline funding need would be $900,000. However, this calculation is just a starting point. You also need to factor in capital for growth initiatives. These could include hiring key personnel, investing in marketing and sales, product development, or scaling your infrastructure. The exact amount will vary based on your industry and specific plans. For example, a SaaS startup might need additional funds to hire engineers and invest in customer acquisition, while a biotech startup might require substantial capital for research and development or clinical trials. Your funding target should align with specific, achievable milestones. These milestones should significantly increase your company's value and set you up for your next funding round or path to profitability. For instance, an e-commerce startup might determine it needs $2 million to launch its platform, acquire 10,000 customers, and reach $1 million in annual recurring revenue within 18 months. Industry norms and investor expectations in your region also play a role in determining how much to raise. In tech hubs like Silicon Valley, seed rounds often range from $1-3 million, while in other regions, they might be closer to $500,000-$1.5 million. Research recent funding rounds for comparable startups in your area and industry to gauge appropriate amounts. It's wise to include a buffer of 20-25% in your calculations to account for unexpected expenses or opportunities. If you've determined you need $1 million to achieve your goals, aim for $1.2-1.25 million to give yourself some cushion. Balancing your funding needs with dilution is essential. While you want to raise enough to achieve your goals, you also don't want to give away too much of your company too early. Typically, startups aim to limit dilution to 20-30% in any given round. If your startup is valued at $5 million post-money, for example, you should aim to raise no more than $1-1.5 million to stay within this dilution range. Let's look at a practical example. Imagine you're founding a SaaS startup in Austin, Texas. You calculate that you need $60,000 per month to cover salaries for a team of five, office space, and other expenses. Aiming for 18 months of runway, that's $1,080,000. You also plan to hire two more developers and a marketing specialist, estimated at $300,000 for the first year, and launch a major marketing campaign costing $200,000.
business-startup-costs
business-startup-costs
Introduction
Launching a startup is a challenging but exhilarating journey, one filled with promise and potential. But did you know that 90% of startups fail within the first three years? A big reason for this is the underestimation of startup costs, which will eat into your cash more quickly than you anticipate. Understanding and planning for all manner of startup expenses can mean the difference between your business taking flight or crashing before it leaves the ground.
That’s why we put together this essential guide to startup costs. Whether you're a first-time entrepreneur or a seasoned owner looking to expand, our roadmap will help you navigate the financial nooks and crannies of launching a business. We'll delve into what startup costs really are, how to prioritize each, and how to budget for them effectively.
From legal fees and office space to marketing costs and employee salaries, we'll break down the most common startup expenses and give guidance on how to manage them. More importantly, we'll show you how to calculate these costs accurately, explore strategies to reduce them, and help you avoid the pitfalls that have tripped up many before you.
If you're ready to turn your startup dream into a reality, think of this guide as your first step toward building a solid financial foundation for your business. Let's dive in and set your startup on the path to success.
startup-budget
startup-budget
You can grab a notebook and manually create your . Or, speed up the process with the budgeting features in popular business accounting software. If you integrate your other financial tools, such as your business bank account, your general budget will update automatically. No need to go digging through each individual app to find your monthly spend.
A spreadsheet program like Google Sheets or Microsoft Excel is another user-friendly budgeting option. In any case, there are many free templates to utilize. Choose one with an intuitive layout and the timeline you need. Enter sample numbers into the spreadsheet to test the formulas. That way, you don’t input hours of data only to find out the spreadsheet doesn’t work.
Setting an upfront budget goal will help you stay on target as you tally up your must-have and nice-to-have purchases. Don’t forget to factor in a starter emergency fund. Experts recommend having cash for at least three months’ expenses. Although this may be out of reach at first, budget what you can for contingencies.
When budgeting, entrepreneurs start with expenses because they’re much easier to predict. Let’s get started.
startup-fundraising
startup-fundraising
Delivering a strong pitch
When the meeting begins, focus on delivering a strong pitch. Use simple language and avoid technical jargon. Your pitch should be clear and easy to understand, even for those who may not be experts in your industry. A compelling narrative will help capture the investor's attention, and a well-told story can make your startup more memorable and engaging.
Support your pitch with relevant visuals from your deck. Charts, graphs, and images can help reinforce key points and make complex information easier to grasp. Use these visual aids strategically to enhance your verbal presentation.
Handling questions and objections
After your pitch, be prepared to handle questions and objections confidently. Answer questions directly and provide evidence to support your claims. Be concise in your responses while ensuring you fully address the investor's query. Use data and research to back up your statements and address any concerns. Having concrete evidence adds credibility to your assertions.
Maintain composure even if faced with challenging questions or objections. Your ability to remain calm under pressure can inspire confidence in your leadership abilities. View tough questions as opportunities to demonstrate your deep understanding of your business and market.
Negotiating terms
If the meeting progresses to discussing terms, be prepared to negotiate effectively. Familiarize yourself with common terms like valuation, equity, board representation, and liquidation preferences. Understanding these terms will help you navigate negotiations more confidently.
Approach negotiations with a balanced mindset. Be prepared to advocate for your interests while maintaining a positive relationship with the investor. Remember, this could be the beginning of a long-term partnership, so it's important to strike a balance between standing firm on key points and showing flexibility where appropriate.
By thoroughly preparing for investor meetings and approaching them with confidence and flexibility, you'll increase your chances of making a strong impression and securing the funding your startup needs to grow and succeed.
business-startup-costs
business-startup-costs
Most common startup costs and expenses
Every dollar counts when you're building a business from the ground up, and knowing where those dollars are most likely to go is half the battle. Let's dive into the most common startup expenses, so you can budget wisely and show potential investors that you’re ahead of the game.
Almost every startup will need legal assistance for:
Industry and location often dictate the types of permits and licensing you’ll need:
Most states require it. Essential coverage includes:
Core tech needs typically include:
Even with remote work trends, many startups need a physical space:
This line item typically grows as you grow, but your initial marketing efforts will include:
Product-based startups incur a lot of physical costs:
Most startups need ongoing expert support in some essential areas:
This is often the largest expense and also will vary:
Essential SaaS tools often include:
Building relationships is crucial:
business-startup-costs
business-startup-costs
How to calculate startup costs accurately
Calculating startup costs accurately is tricky, but it’s a key first step in launching a successful business. To begin, identify all necessary expenses by creating a comprehensive list of potential costs. This should include obvious items like equipment and rent, but also easily overlooked expenses such as business registration fees, insurance, and initial marketing costs. For instance, a tech startup might need to budget for software licenses, cloud storage, and developer tools, while a retail business would need to account for inventory, point-of-sale systems, and store fixtures.
Once you have this list, gather detailed cost estimates for each item. Consider consulting a fractional CFO who can help validate your estimates and identify commonly overlooked expenses. Don't rely on a single source; instead, obtain multiple quotes to ensure accuracy. For example, if you're budgeting for office space, contact several real estate agents, check online listings, and consult with other local business owners to get a range of rental costs. For major purchases like equipment, get quotes from at least three suppliers. Lean on online resources, industry associations, and networking contacts to gather benchmark data for less tangible expenses like marketing or professional services.
Finally, factor in contingencies by adding a buffer to your total estimated costs. While 10-20% is a common rule of thumb, the exact percentage should be tailored to your specific situation. Consider the complexity of your business model, the stability of your industry, and any potential regulatory changes that could impact costs. For instance, a straightforward service-based business might only need a 10% buffer, while a manufacturing startup dealing with complex supply chains and equipment might warrant a 20% contingency. Such a cushion can be hard to set aside but it’s crucial for handling unexpected expenses, cost overruns, or delays in revenue generation.
By being as detailed and thorough as possible, you'll develop a more accurate picture of your true startup costs and be more likely to avoid financial surprises.