Friday, June 29, 2012

The challenges of a start-up (1)

NSKN is a publisher of board games and, therefore, a company. We started more than 1 year ago and from time to time we are trying to draw the line and see exactly where we stand. Now is not one of those moments, it's just the beginning of a new week, with new thoughts, most of them of how crazy life is when you are self employed. So, this post is less about board games and more about what are the challenges of starting up a company and bringing it to either success or bankruptcy.

Well, the path to bankruptcy is quite simple, paved with poor management decisions, bad cash flow management, lack of people skills, not knowing how to sell. And you don't even need all these ingredients, usually one or two of them are enough to take you down that road.

The way to success is far more complicated. Not making any bad decisions does not necessarily mean you made good decisions. Not making mistakes is not the same with doing the right thing. One year of hard, successful work can be cancelled in a split second by a really bad decision.

I guess that the major challenge for any start-up company is to survive past its first year and a half, maybe two years, when the money and the reputation have piled up high enough to counterbalance one major poor decision. The initial plan, no matter how good, will have to be adapted to the changes of the market, to the new technologies and the ever changing demands of the customers.

Moving from general and abstract thoughts to practical challenges, in my opinion the biggest "hill to climb" is cash-flow management. Those who were involved in managing a business know that the government is very willing to take and not so happy to give back (e.g. VAT return, income tax), so the lack of knowledge of the (ever-changing) laws combined to high receivable may lead to a short in the cash-flow which may lead to... I don't really want to say the word, but you know what I mean.

The second big challenge is to stay up to date with the customers. The life cycle of a product (in the case of NSKN this is Warriors & Traders) is different for similar (not identical) products. How long a board game lasts on the market depends on many factors. I can count the notoriety of the publisher, the overall quality of the game-play, the investments in marketing to keep the interest alive and these are just the most important criteria. Of course, having good cash-flow may help deal with the marketing part, but for the first two aspects (notoriety and quality) there is not much a publisher can do after releasing a game. The same principle also apply outside the board games world.

I will talk about challenges number three, four and five in my next post. Stay tuned!

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