Secrets of Successful IT Startups

By Jessy Smulski (Tech Writer)

According to the latest US Business Formation Statistics (BFS), US start-ups are on the rise—up by almost 25% since 2019, which represents the largest increase in a decade. On its own, this upward trend is noteworthy. Within the context of the last 18 months, the sudden spike is nothing short of remarkable. However, looming over these brave entrepreneurs is another daunting statistic: 90% of new start-ups fail, and 20% will fail within the first year of business, which begs the question—What are the top ten percent of new startups doing to survive? 

Aristotle coined the saying, “We are what we repeatedly do. Success is not an action but a habit.” By his logic, if you study and mimic the following three habits of successful IT startups, you can improve your odds of not only surviving but also earning rank among the elite.

Habit #1: Impeccable Accounting, Tax Prep, Bookkeeping & Payroll Practices

A company’s net profit margin indicates how well incoming funds are managed against overhead and operating costs. Accounting activities, including tax prep, bookkeeping, and payroll, collectively represent a net profit margin of 18.4% — enough to make or break even the most promising IT business.

Habits Body 2The most successful startups understand that bookkeeping errors, overspending, equity imbalances, excessive payroll spending, and other accounting issues can quickly create cash-flow issues, not to mention sending the wrong message to current and potential investors. To prevent rapid growth from triggering financial hemorrhages, savvy startups put the time, budget, and consideration into adopting the right accounting tools and partnerships from day one. Additionally, they select ancillary management tools based on compatibility and integrability with core accounting and payroll systems, such as QuickBooks.

Habit #2: Diligent Funding Preparations

Roughly 75% to 80% of startup failures can be attributed to three mistakes:

1. Poor Cash Flow Management.

2. Lack Of A Fully-Developed Business Plan. 

3. Improper Product Or Service Pricing.


Those who have succeeded financially did not do so by starting out with the most capital. More likely, they recognized the current or potential significance of investor relations and prioritized market research, businessHabits body 1 planning, and funding initiatives above the more enticing startup activities, such as branding, sales, marketing, and advertising. Taking your product or service to market is exciting, but without making a habit of putting the prep work first, your venture risks suffering the fate of the majority. As a part of your ongoing due diligence, consider adding the following to your priority list:

1.Set Financial Goals

2.Set up C Corporation

3.Patent Intellectual Property

4.Build a Team of Advisors

5.Explore all Possible Financial Reserves

6.Research Venture Capital Firms 


Prepare For Venture Capital Opportunities, including a professionally-designed presentation of the following:

1.Executive summary

2.Value proposition

3.Positioning statement

4.Documented business plan

5.Growth timeline

6.Target budget


Note: when pursuing venture capital funding opportunities, timing is everything. These types of investors are known for taking big risks to reap big rewards. While this can be a good thing for some startups (fortune favors the bold), it can also capsize the business without the proper foundation in place, including legal representation.

Control The Impulse to Jump


The proverbial “leap of faith” may have its advantages in certain situations, but using it as the momentum to start your IT business should not be one of them. There’s a reason why most founders of successful IT start-ups are “seasoned”. 

Statistically speaking, a 60-year-old startup founder is 3x more likely to succeed than a 30-year-old founder. 

One potential explanation is that more seasoned start-up founders have spent a lifetime developing the skills and experiences needed to build a competitive business. This isn’t to say that young entrepreneurs shouldn’t go for glory, but it does suggest that start-up founders should take every opportunity available to gain new experiences, learn new skills, and achieve higher levels of qualification. The start-up game is won through strategery, not spontaneity.

Always Keep An Eye On IT

Ultimately, the fate of this year’s IT start-up population will boil down to financial management, business savvy, and economic recovery. However, just because your company lives and breathes IT, this doesn’t mean it’s impervious to the damning impact that rapid changes in technology can have on internal operations and service delivery. If a fish can suffocate in water, an IT startup can fail due to technical inefficiencies. Look for IT management software that offers simplicity, a range of integrations, and the operational tools you need to automate and streamline processes across core business functions and expand and extend capabilities.

SherpaDesk is the definitive helpdesk solution for all your support, project management, and billing issues. 

Ready to get a handle on your small business? 

Power your helpdesk with your Free Online SherpaDesk Support Desk Software.


Sign Up for Our Blog Updates and Stay
on Top of the Latest News and Tips


Jessy Smulski
By Jessy Smulski

Jessy turns tech talk into thought-provoking stories for readers and leaders across the country.