Realign With Your Startup’s North Star in 2024

Paul | Graphite - Startup Accounting Services

Paul Biano, Founder and CEO at Graphite

As we head into a new year, many startups are ready to execute a fresh strategic plan. For some early-stage startups, that may mean refining or reevaluating foundational brand messaging pieces like the mission statement or company vision. 

However, I would argue that the strategy that you should put more stock into is your startup’s North Star. 

Increasingly, organizations are touting North Star metrics as one of the best indicators of success due to their ability to cut right to the areas of growth that matter. But I want to back up a little bit and talk about the intention behind these metrics. 

To determine what these key metrics are, you first need to understand the overall “why” for your organization. 

How to Define Your North Star

Your startup’s North Star is the guiding principle that gives you a clear direction to forge towards. 

Starting a company is a long-term commitment—in many cases following you for the next 5, 10, or 15 years of your life. Clarity on what you want those years to look like from the beginning is a major asset. 

It’s important to consider here that, as a founder, your business life and personal life are going to be highly intertwined. Your North Star should take that into account. Consider how you want your life to look in the next several years, and then reverse engineer your North Star to fit the company into that puzzle. 

For a practical example of how simple this could look, I’ll share our North Star here at Graphite. Or more appropriately our two North Stars, since I couldn’t settle on just one. 

The first is that we want to be a great place for people to work and build their careers long-term. And the second is to deliver exceptional service to our clients. 

These two simple statements have created an incredible synergy and have been the foundation upon which we’ve made every decision at Graphite. This clear purpose and conviction is the reason that we’ve been able to grow steadily. 

It’s unrealistic to expect to have all of these answers from day one. As time goes on, your understanding of what you want for yourself and your company, as well as an understanding of your customers’ needs, will evolve. 

However, being intentional about defining this North Star at the beginning—even if you need to tweak it over time—will make it much easier to trust your instinct and make decisions in alignment with the kind of future you want.

Create a financial strategy you can rely on.

Does Raising Venture Capital Align With Your North Star? 

When you’re an early-stage startup, taking on venture capital as early as possible is an enticing safety net to fall back on. But just because it’s a popular option, doesn’t mean that venture capital is the right option for every startup. 

To determine whether it’s the best path for you, lean on your North Star. 

Our North Star at Graphite guided us to grow slowly and steadily. If we had taken on the influx of cash that VC funds offered, it could have sabotaged the quality of service we were providing to our clients, and potentially impacted the experience our employees had. 

Bootstrapping, as opposed to taking on investor funds, can be a great route for many service-based businesses that want to grow through deep, high-touch relationships with clients. Deciding not to fundraise also helps you avoid the trap of overspending and forces you to be more creative with limited resources. 

But in some cases, funding is necessary.

Often for product companies, you’ll have to pay for engineers, supplies, and a slew of other expenses before you can even generate revenue. And unless you’re already personally wealthy, it’s almost impossible to bootstrap it without extensive business acumen and the ability to develop a product yourself. In this case, the safety net may be a necessary one to avoid the risk of destroying yourself financially. 

When you do take on outside funding, alignment with your North Star is even more important to intentionally pursue. Defining a clear direction for your startup is critical not just for your internal team, but also for your investors. To even receive funding, a reliable and timely path toward significant revenue generation is a requirement. 

VC firms are increasingly selective about where they invest their money due to the surge of investments in 2021 and the decline since. A vague plan for growth is no longer acceptable. The days of a VC in the form of a knight in shining armor swooping in to save a highly unprofitable business with questionable potential are over. 

Clarity Is Having a Moment  

The products or services that are thriving in the competitive startup world now are those that act like a “painkiller” for the target audience. And the teams behind those companies have likely baked this understanding into their North Star. 

They are clear on the exact value they deliver, so they can walk potential investors through what their growth will look like with conviction. And even after investment, this North Star guides them to actually deliver on the projections they made.

Clarity is the word of the moment now. You need to be clear on your goals, clear on your direction, and clear on your financial strategy. 

Whether you’re ditching the safety net and bootstrapping, or you’re pursuing VC funds and need help making the best financial case for your startup, you’ll need a reliable partner.

Graphite’s team has the expertise to support you in bookkeeping financial modeling, and tax compliance. Reach out to us and we’ll show you how we can help your startup succeed this year, using your North Star as the guide.

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Born out of a VC fund, Graphite fully understands the strategic and financial needs of high growth companies. If you need accounting support or simply have a question about accounting at your company, feel free to connect with us!

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