[Report] Founders Survey Insights: Navigating Shifts and Challenges with Early-Stage Startups
I’ve had the privilege of working with hundreds of early-stage startups, coaching and partnering with many founders to help them create, execute, measure, and refine their growth strategies.
Over the past 18 months, we’ve seen significant market shifts like Google’s declining market share, restricted VC funding, and the rise of AI. These changes have given us a chance to observe, learn, and understand how startups are adapting and what these changes mean for growth now and in the future.
To get a clearer picture of the challenges founders are facing and how we can support them as they adjust their growth marketing strategies, we sent out a survey. We asked about their budgets, growth plans, and top priorities for the second half of 2024. We used Google Survey (linked here) to collect responses from the end of March to the beginning of July. 80% of the respondents are founders running companies with 1-10 employees, while the other 20% have teams of 11-50 people. Most of the respondents (90%) are from B2B startups, with only 10% in retail and DTC. Among the B2B startups, the majority are in the Healthcare/Medical industry. All respondents identified their startups as being in the pre-seed or seed stage.
Here’s a summary of the responses, key takeaways, future predictions, and actionable steps for the rest of the year.
On a scale of 1 to 10, how challenging has it been for your company to manage growth amidst financial uncertainty and tight budgets while maintaining a strong emphasis on profitability?
Balancing budgets and knowing what to prioritize is always a challenge, regardless of economic conditions. Founders reported significant difficulties managing growth while fundraising. On a scale from 1 to 10, with 10 being the most difficult, not a single response was below 7.
The downside is that some startups might never get off the ground because they lack the budget to keep investing in their product or business model. From my 10 years of experience working with startups, I’ve seen that some ideas require larger budgets to validate traction. Without the time or budget (including the ability for the founder to pay themselves a salary), it’s hard to convince people that the startup is worth the investment.
Although I’m biased, since I started a growth marketing agency in a different economic climate and it’s a service-based business, I believe this situation forces founders to do their own marketing work rather than outsourcing it, which can be more beneficial in the beginning. It also requires founders to do things that don’t scale, like sending out emails, attending events, or holding one-on-one demos, instead of spending heavily on ads in the early stages. This approach helps them learn much faster.
No matter the industry, in the early stages, you’re putting something out there, getting reactions, and making small pivots based on feedback. There’s no better way to understand your audience and market than by having your feet on the ground.
What primary strategies or approaches has your company used to sustain growth in the face of financial uncertainty and tight budgets while prioritizing profitability?
Two common themes emerged from the responses. The first, unsurprisingly, was founders focusing on SEO and organic strategies, along with grassroots efforts. This approach works well if you’re in an industry with existing demand and have a focused SEO strategy with a mix of high-intent and high-volume keywords you can rank for. However, this won’t yield immediate results. It’s a worthwhile investment, but you need to consistently focus on it and understand that you likely won’t see results for 6+ months. This delay is due to your low domain authority and thin website content, which affects your credibility with Google and other search engines. Building this up takes time.
The second major theme was about team structures. Many founders mentioned relying less on full-time employees and instead paying hourly rates or reducing people costs. For example, one respondent said, “We utilize part-time staff when possible, don’t support benefits for most of our staff, and work remotely to cut down on office space costs.”
These strategies highlight the need for patience and flexibility. Investing in SEO and organic growth can build a strong foundation, but startups need to complement these long-term efforts with quick wins to keep momentum. Similarly, using part-time and remote teams can save costs and add agility, but it’s important to have effective management systems in place. By combining these approaches, startups can navigate financial uncertainties while setting up for sustainable growth.
How confident are you in your ability to balance the need for growth with the imperative of maintaining profitability in the current economic climate?
The most common response to this question, rated on a scale of 1 to 10 (where 10 signifies the highest confidence), was a 6. While this may seem only slightly above average, when you consider findings from other studies like the Techstars Innovation Survey, which reports that 74% of founders remain optimistic about the future, it suggests that entrepreneurs are determined to pursue their dreams and make a difference in the world, regardless of the challenges they face in their environment. And to that, we say a big hell yeah!
To what extent do you believe your company’s culture and values contribute to its ability to navigate financial uncertainty and tight budgets while emphasizing profitability?
The average response, rated on a scale of 1 to 10, where 10 indicates significant contribution, was 8.5. In theory, this aligns well. According to this HBR article, company culture has grown in importance due to recent high-profile culture crises at companies like Uber and Wells Fargo, the increased focus on diversity, equity, and inclusion (DEI), and the ongoing competition for talent. Culture is now a strategic priority that directly impacts the bottom line. It can no longer be delegated or compartmentalized.
However, this seems conflicting with earlier responses where many startups mentioned outsourcing talent, cutting personnel costs, and relying on contractors or part-time workers. Here’s an interesting question, posed with genuine curiosity: What does company culture look like without traditional full-time employees?
Which areas of your business have been most susceptible to the impact of financial uncertainty and tight budgets, and what steps have you taken to mitigate them while still pursuing growth with profitability in mind?
Again, this seems to boil down to two things: reducing the team size and reallocating all budget from marketing and sales to product and development. Here are some direct responses we received:
- “Marketing. We’ve eliminated our marketing budget to allocate all funds to product and development. This of course hinders our growth, so we are doing as much as we can to speak at conferences, appear on podcasts, etc. to spread awareness about our product.”
- “Growth. You often need to spend more money (on resources, marketing, capacity building) to grow, but it can be challenging if you don’t know what ROI to expect. That’s why it’s important to invest in small, short term tests and if the results are positive, then you invest more. Also, we generally hire internationally to reduce the cost of support.”
- “Growth and people have been the most susceptible. We are having to lean in on mission and commitment of the team and our investors while getting creative about the business model.”
How To Adapt: Practical Steps For Startups, Founders, and Marketers
Pay for strategy—execute yourself. With capital hard to find and budgets tight, you can’t outsource everything. You’ll need to handle the growth work yourself. While it may seem daunting since you’re already juggling many roles, this means you’ll need to get incredibly good at prioritizing what matters most across all business functions, and growth is one of the most important areas. There are many ways to grow, so my advice is to pay for strategy support and consulting. Find someone who can take the time to understand your business and help you create a testing roadmap based on your goals. Once you have a plan, you, the founder, need to execute it. Though it will take time to implement various tactics, this approach ensures you are focusing on the right things, making it the best setup if your budget is tight.
Get proof to build credibility – forget about traffic. When asked how they’re rethinking budgets with fundraising so difficult, founders mentioned shifting from paid ads to grassroots efforts and SEO. The challenge with SEO is that it takes a long time to show results. My guess is that founders are looking for ways to drive traffic to their website, product, or app without spending money on ads, so they turn to organic efforts.
I’d suggest taking it a step further. While you’re bulking up your website content, focus on building credibility rather than just driving traffic. Instead of tracking traffic volume, look at metrics like time on site. I’d rather have 100 visits a month from visitors who explore multiple pages, book a demo, reach out, come back, and find value, than 10,000 visitors who leave after 3 seconds. No one will be impressed by high traffic volume if it doesn’t lead to any results or revenue.
Don’t just hire a freelancer to churn out low-value content daily. Quality beats quantity. If you can win a few customers or clients, double down on that. Turn their stories into social proof, case studies, and video testimonials to give new visitors more confidence in what you’re selling.
Sustainable growth is better than explosive growth. While I’d argue that balancing growth and profitability should always be a priority for businesses, it’s even more crucial now than it was a few years ago, which isn’t surprising.
If you can consistently show month-over-month revenue growth and have a reliable process for doing so efficiently, you’ll attract the funding you need. Why? Because you’ve proven that you understand what works and what doesn’t, and you have a systematic approach to sustain that growth.
Instead of focusing on reaching 500 customers by the end of the year (which can feel overwhelming and uncertain), concentrate on improving your Customer Acquisition Cost (CAC) each month or acquiring one or two new customers monthly. Aim to get better each month and ignore the rest.
Focus on developing processes and systems tailored for part-time workers and contractors. If you’re working with contractors, freelancers, or offshore talent, your ability to communicate your vision and needs to the team becomes ten times more critical. It’s essential to establish clear communication frameworks and use project management tools to ensure efficiency and foster autonomous working relationships with those who contribute to your company’s growth. Setting up communication systems detailing when, where, and how you interact with part-time contractors, freelancers, and offshore talent is arguably as crucial as any other growth or product initiative.
Moving Forward
Navigating growth during tough financial times isn’t easy for early-stage startups. Our survey highlights the smart, resourceful ways founders are adapting, from focusing on SEO and organic growth to rethinking team structures. These strategies require patience and creativity, but they lay the groundwork for long-term growth and success.
At Tuff, we get the challenges you’re up against. Whether you need a solid growth plan or just some expert advice, we’re here to help you focus on what really matters and keep moving forward. Let’s tackle these hurdles together—reach out to Tuff and let’s get your growth on track.
Ellen is the founder at Tuff and one of the team’s core growth marketers. She is a versatile marketer with expertise in multiple channels – from ppc to seo to email to others – responsible for the experiments and testing. She is happiest when she’s on the ski hill or outside pointing her mountain bike downhill.
