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October 15, 2014

Anna Ruth Williams



This is the second in a three-part series on the intersection of PR, startup funding and burn rate.

Last week, I blogged about the current buzz over burn rate, and how more and more venture capitalists are voicing their concerns publicly.

Like any great problem, minimizing burn rate requires a great solution. Startups should understand this paradigm, as it is the very same one for which most are founded. The answer might originate in something as simple as increased discipline. Not just financial discipline, but also organizational, industrial and cultural discipline that is pragmatic enough to implement best practices and guidance for how to objectively weigh the ROI of short-term wants vs. long-term needs.

But how can you hammer home the importance of discipline among a group of people – tech entrepreneurs – who have it in their DNA to take risks and who largely excel on the adrenaline of day-to-day discovery?

What’s important to communicate here is that it’s not an either or situation, in that a person, or a startup, doesn’t have to sacrifice their adventurous nature for discipline. It’s not un-entrepreneurial to form the habit of asking, “what expenditures are truly going to move the needle most?”

  • Content marketing or paid advertising?

  • Product development or platform acquisition?

  • Social media or public relations?

  • Greater employee training or paid networking?

  • Attending trade shows or increased sales team training?

  • Outsourcing or college recruiting?

As a lifetime PR professional, I’m bias in my belief that public relations is, more often than not, the most transformational investment that a startup can make. There is simply no other medium that cohesively marries the subjective content needed for emotional connection with the objective substance required for independent validation, differentiation, valuation and revenue generation. A good and resourceful PR firm has the skilled employees to not just understand a clients’ business and industry, but to continually recommend and execute dynamic strategies and tactics that exceed a diversity of important goals. And really, what else does a startup need?

Startups must recognize that the current burn rate narrative (see my last blog) is not going to change for some time and that more-and-more investors will inevitably join the ranks of this public discourse. There are simply too many reasons for them to abstain. As a result, some startups will inevitably be forced to make harsh financial cuts, while others might benefit more from investing more strategically. The majority probably needs to do both, or risk losing venture capital investment for good.

At Alloy, we also advocate cohesive annual planning as a means to control marketing burn rate. For tactical tips, tricks and best practices on this topic, register for our 10/29 webinar entitled Prepare. Plan. Repeat. – Just in time to help you with 2015 planning.