By Melea McRae
This October marked the seventh annual Pure Pitch Rally, one of my favorite start-up events in Kansas City. It’s essentially KC’s own version of Shark Tank, bringing together 100+ land sharks – the “who’s who” of investors, business leaders and VIPs of venture capital – along with eight startup founders who pitch their business model and are vying for the land sharks funding and resources. This event is just one of many examples of the collective movement to support startups in Kansas City.
I’m a big fan of supporting Kansas City’s entrepreneurial community. As an entrepreneur myself, supporting startup events and organizations has always resonated with me as an opportunity to give back to the community that’s helped me succeed. From the original StartUp Village and publications covering KC Startups like Startland News, to the rise of venture capital focused on KC startups and keeping them in KC, I’ve loved being on this entrepreneurial ride.
When I founded Crux in 2016, I was told 80% of startups fail by year 2, and only 50% of the surviving 20% ever make it to year five. Daunting statistics for a new startup founder on the scene. Earlier this year when talking to my banker, I was told those numbers have shifted and now only 1% of startups make it to year five.
Thankfully, this year marked Crux’s fifth year in business. We’ve defied the odds, and I’m proud of the marketing machine I’ve built alongside my loyal and growing team, client base and trusted advisors.
Entrepreneurial ecosystem building by the numbers
From job creation to innovation to economic development opportunities, startups continue to fuel our economy, create jobs and build our future. I’ve always believed entrepreneurs are the backbone of an economy. When I was with the KC Chamber, I was involved in the launch of the Big 5 Initiatives for a Greater KC in 2011. One of those initiatives was to make Kansas City America’s most entrepreneurial city, and it’s incredible to see how far we’ve come since then.
A record high of $1.09 billion was raised in 2021 by qualifying, venture-backed Kansas City companies. SourceLink, which helps cities, states and regions with job creation through entrepreneurship-led economic development systems, explains:
“In 2020, more than 10,800 U.S. companies received venture funding. And 3,680 venture funds had $548 billion in assets under management, according to the National Venture Capital Association … In 2020, Missouri ranked 24th and Kansas ranked 38th among states for capital invested by VCs. That money matters. Missouri companies raised more than $475 million in venture capital through a total of 79 deals. And Kansas companies raised almost $100 million through 21 deals.”
SourceLink defines an entrepreneurial ecosystem as “an interconnected network of support players – people who work to give entrepreneurs the access, tools and information they need to be successful.” This network includes people, programs and services that “enable and advance the growth of entrepreneurs in a cohesive, self-sustaining and connected way.”
A successful entrepreneurial ecosystem is one that connects creators and innovators with the resources and support they need to succeed. Opportunities like Pure Pitch Rally and Pipeline Entrepreneurs’ fellowship surround and reinforce entrepreneurs with the dollars, mentorship and training needed to grow their businesses in sustainable ways, and the support of economic development councils put the structure in place for cities like Kansas City to compete with the coasts for critical investment opportunities.
Transitioning from a startup to a small business
Every successful business follows a life cycle marked by important inflection points. When we hit year five, we found ourselves at one of these critical moments, realizing we needed to throw some gasoline on our own marketing machine to make the necessary investments to continue to grow and evolve. We transitioned from a startup – where emerging businesses work to establish and grow their brand with purpose and precision – to a scaling, sustainable small business. This shift has allowed us to take our business to new heights, growing our revenue by 62% and increasing our headcount by 100% in 2021.
Brandon Dempsey explains this growth phase in Forbes:
“The growth phase is where your business solidifies its stance in the marketplace. Turn your focus inward as you build teams and hire higher-level people to run operations. Spend your time on activities that help the company grow and identify what barriers could inhibit your growth. Take the time to strengthen your relationships with clients. Invest in your employees and push them to take more ownership of both internal processes and client relationships.”
The timing of our infusion of capital this summer allowed us to do exactly that, from hiring a slew of new talent including a new President & COO to investing in our own marketing efforts to investing in the development of our leadership team and involving them in all aspects of the business from business development to client success. We’re making the right investments in people, process and technology, retaining clients and increasing rates in a sustainable way that meets market demand and adds incremental value to the business model.
Words of advice for breakout entrepreneurs
As I begin looking toward the next five years, it’s good to stop and reflect on the lessons learned thus far. Whether you just had your “big idea” or are a few years in and wonder how you should be taking your business to the next level, the following five pieces of advice will hopefully give you a heads up in terms of lessons I had to learn along the way.
- Cash is king, so take steps to protect it. Being debt free doesn’t mean anything if you’re not growing. Capital investments at the right time can be absolutely necessary to fuel your organization’s growth to the next level, allowing you to hire high-level resources, invest in better technology that fuels productivity, amp up employee perks for stronger retention rates, and more to remain competitive and continue your growth trajectory. Whether it’s equity or debt, be open to a cash infusion if it means fueling growth and if it means improving your cash position to give you some breathing room to feel more confident investing in your business.
- Live by your core values. In the last year, we’ve worked to better define our culture through our TEAM CRUX values: Trusting, Entrepreneurial, Accountable, Motivated, Collaborative, Respectful, Unrelenting and X-ceptional. These values are at the core of all we do as an organization: We hire and fire against them, we’ve developed a performance management tool around them (as well as a peer-nominated Employee of the Month program), and we vet and assess our client partnerships with them. When done right, these values are baked into all you do as an organization, allowing your team to rally behind common beliefs that serve as a north star as you continue to grow.
- Your time is valuable too, and it’s important to prioritize your professional development as well as your own health and wellness so you can be a better CEO. Invest in leadership development for yourself and then share that knowledge with your team. By building in layers within your organization, you can delegate the tasks you’re less passionate about so you can focus your energies on the business versus in the business.
- Celebrate your uniqueness. Every great entrepreneur has a big idea—something that differentiates them from others in the industry. Identify those key differentiators and then market that uniqueness to your target audiences. By knowing who you are – and who you’re not – you can hone in on your brand promise and market that message far and wide.
- Finetune your listening skills. Listen to your clients AND your employees. Sometimes the best ideas come from the least likely places. Make it a priority to regularly check in with your team and your clients to assess what’s working and where your processes can be improved. We’re able to remain competitive from a recruitment and retention perspective by keeping the lines of communication open. By surveying or scheduling regular touch-base sessions with our clients, we better understand their needs and have evolved our offering to better serve them.
Rarely do entrepreneurs get it right the first time around. It takes grit, determination, drive and a willingness to evolve and adapt to an everchanging marketplace to succeed, and I’m living proof. So if at first you don’t succeed, try again – and when you’re ready to make a smart marketing investment to stand amongst that 1%, we’ll be waiting.
Melea McRae is helping business leaders find their voice at Kansas City’s first “un-agency.” Are you ready to become a thought leader? Connect with Melea on LinkedIn or share your thoughts on Facebook or Twitter.