Home > Resource Hub > Business Resources > Startups: The Growth Mindset

Startups: The Growth Mindset

Startups: The Growth Mindset

As a new entrepreneur gearing up to start a business or a business owner who’s recently opened their doors, there’s a lot of uncertainty ahead of you. Everyone whom you’ve told about your idea has probably (rather unhelpfully) mentioned what percentage of small businesses fail.

There is a ranging statistic based on this but, in general, the range spans from 75-90%. Now, it feels a bit negative to mention this but it is important that aspiring and current startups understand the hurdles they need to jump over. There is a huge number of challenges so it is important to make sure you understand them well to avoid getting caught out.

Let’s start off with the basics.

Growth Mindset

A mindset, according to Carol Dweck, is a self-perception or “self-theory” that people hold about themselves. Believing that you are either “intelligent” or “unintelligent” is a simple example. The thing is, people can be aware or unaware of their mindsets, but they can have a profound effect on learning achievement, skill acquisition, personal relationships, professional success, and many other dimensions of life and the business you are trying to run.

Dweck’s educational work centres on the distinction between “fixed” and “growth” mindsets.

  • Fixed– people believe their basic qualities, such as intelligence or talent, are simply fixed traits. They spend their time documenting their intelligence or talent instead of developing them whilst also believing talent alone creates success without effort.
  • Growth – people believe that their most basic abilities can be developed through dedication and hard work – brains and talent are just the starting point. This view creates a love of learning and a resilience that is essential for great accomplishment.

This growth mindset explained by Dweck here is synergistic with that of business growth for an entrepreneur. The uncertainty of starting a new business means that your mindset has to be that you can adapt and learn.

Dweck’s findings also suggest that when people with a fixed mindset fail at something, as they inevitably will, they tend to tell themselves they can’t or won’t be able to do it or an excuse is made to rationalize the failure. But failure is a part of the process in itself.
A Fixed mindset is instilling failure into the process and this needs to be switched to a Growth mindset.

The Startup Cycle

Stage 1: Seed And Development

This is the very beginning of the business lifecycle. You’ve got your business idea but first, you must assess just how viable your startup is likely to be.

Hurdle – Preparation, it’s where you take a step back and consider the feasibility of your business idea

Stage 2: Startup

Once you have thoroughly canvassed and tested your business idea and are satisfied that it is ready to go, it’s time to make it official and launch your startup. Many believe this is the riskiest stage of the entire lifecycle with 25% of startups not reaching their fifth birthday due to mistakes made at this stage.

Hurdle – Adaptability is key here, in keeping with the growth mindset

Stage 3: Growth And Establishment

If you’re at this stage, your business should now be generating a consistent source of income and regularly taking on new customers. Cash flow should start to improve as recurring revenues help to cover ongoing expenses.

Hurdle – Dividing time between a whole new range of demands requiring your attention

Stage 4: Expansion

At this stage, you might feel there is almost a routine-like feel to running your business and your business has now firmly established its presence within the industry. You might start to think about broadening your horizons.

Hurdle – Keeping the urge to continue and not letting complacency set in. There are, of course, two sides to this coin, with the other being a risk of expanding too carelessly

Stage 5: Maturity And Possible Exit

Having navigated the expansion stage of the business lifecycle successfully, your company should now be seeing stable profits year-on-year. It could be said that entrepreneurs here are faced with two choices: push for further expansion, or exit the business.

Simply put, as your business grows and develops, so too do your business aims, objectives, priorities and strategies and that’s why an awareness of what stage of the business lifecycle you are currently at is important. But as your business moves past the startup phase, the hurdle turns to; can you keep the market interested? Can you continue to innovate? Here, the Growth Mindset is crucial!

Stats and Figures

Stats and figures

Here is a list of some facts. Yes, 75-90% fail but it’s not all doom and gloom and we’re here to help you be one of the success stories. Starting up is a daunting task, but it’s an exciting one. There are a some big hurdles to leap over so here at Currency UK, we believe in the growth mindset. We can help you through this tricky period of getting your business established and, as the Business Insider statistic points out, the majority of entrepreneurs are concerned with boosting their revenue. So, let’s talk about how we can help you achieve maximum revenue by first highlighting the hurdles we can help you overcome.

Startup Reasons for Failure

Now we’re not the biggest fans of talking about negativity but it is important to understand the reasons why startups fail. Then you can concentrate on the flip side; creating a successful business.

Reasons for failure

Here we have five reasons for failing, ranked in order of how common they are, two of which are financial; we’ll come to the financial reasons shortly.

1) No market need

Simply, is the product or service in need? Are you trying to better something already created or create a niche; is your product or service better, more efficient, cheaper or is the niche you’re creating actually going to make a difference?

3) Not the right team

Having a team with similar beliefs or The Growth Mindset (just like you) is crucial. Simon Sinek, in a TED talk, explains how people don’t buy what you do, they buy why you do it. Simon explains the Golden Circle concept whereby
– Why you do what you do is at the core
– How you do what you do is the next ring up and
– What you do forms the outer ring.

He gives examples ranging from the Wright Brothers inventing the aeroplane to Steve Jobs building Apple and how these successful individuals started with Why they do what they do at the core, followed by How and What they do.

Simon also explains how this is not just a psychological way of thinking but a biological fact. To take a cross-sectional look at the brain from the top down, our limbic system is centred at the core of our brain and gives us our feelings whilst the outer edge of the brain, the neocortex, comprises of our rational, or analytical thought.

My point is that the goal is to do business with people with the same mindset as you and synergise with why you do what you do. A growth mindset, or hard work and a willingness to learn & adapt, is confounded in the successful and shows why it is important to have a team with the same beliefs.

The Golden Circle

4) Get outcompeted

Again, simply, are you the startup that doesn’t have the better product, or have you not been up to date with what’s changing in the market? Something of note that should be mentioned is the upcoming change in General Data Protection Regulations or GDPR for the EU. The GDPR is Europe’s new framework for data protection laws replacing the previous 1995 data protection directive, which current UK law is based upon. It comes into effect on May 25th 2018. It affects all organisations, public and private. It dictates procedures and consequences surrounding data breaches and notifications.

Everyone needs to be ready. You need to know your data, what data exists, how is it managed and who is affected by your data. But not to worry, keep on top of it and you won’t get caught out.

Elizabeth Denham, the UK’s information commissioner, who is in charge of data protection enforcement, says she is frustrated by the amount of “scaremongering” around the potential impact for businesses. “The GDPR is a step change for data protection,” she says. “It’s still an evolution, not a revolution”.

Financial reasons

So, now for the two financial reasons why startups fail. According to the recent Startup Genome Report, an estimated 90% of startups that fail do so primarily due to self-destruction. It was down to their founders’ own bad choices or lack of preparation rather than “bad luck” or market conditions that were out of their control.

As we’ve said, two of the biggest five reasons why startups fail are purely financial. So here lies the problem we are going to address and how you as an entrepreneur can prepare for the financial hurdles that you will face. Specifically, we will address the foreign exchange or FX side to the business, whether that is due to importing manufactured products or exporting your service to the world.

A little bit about foreign exchange

So, a little bit about foreign exchange and how the rates work. Let’s take the Pound/Euro (GBPEUR) rate for example. Currently (at the time of writing this), the rate is 1.14, meaning that for every £1, you get €1.14. This rate can be affected by either the Pound or the Euro. So if the Pound strengthens due to an interest rate hike, positive Brexit talks, or a strengthening economy, this rate will rise and you will be able to buy more Euros with your Pounds. If the UK economy was to weaken or the Euro economy was to strengthen or positive European economics news comes out, this will cause the rate to drop, meaning fewer Euros can be bought with your Pounds.

The general way to think about this is, the better the outlook for a country’s economy, the greater the demand for that currency, meaning the value of that currency will increase against other currencies. Rates are a double-sided coin (ha), meaning either economy involved can cause the rate to move, thus creating the hugely unpredictable FX market we know and (sort of) love.

How often do big swings happen?

You can see in the table below the number of swings that occurred in the FX market over three-month rolling periods in 2017 for Sterling. You can see for Pound/Euro alone there were 3 swings of between 5 and 10%. Three swings in 2017 that could have had a huge effect on your business. Very few businesses can cope with several 5-10% changes in costs in just one year.

So here is the FX problem. Currency volatility or unpredictable swings can cause costs to increase without warning and you may no longer be able to buy or sell your desired level of currency. This can have a fatal effect on your company’s profit margin and the amount of cash flowing through your business may no longer be as much as it was just weeks ago.

What’s the picture we’re trying to paint for you?

It doesn’t matter how much research you do, if you set your costings and revenue based on a fixed exchange rate when in the planning stages, without managing it properly, a scenario such as Brexit happening or simply Donald Trump releasing a tweet can cause your revenue to change drastically for the worse. If it changes for the better, count yourself very lucky.

Fortunately, the way we can manage the FX side to your business is relatively similar whichever stage of the startup cycle you are in. As new demands of your business start to appear and reality sets in, more of your time will be taken up. What time you have left does not need to be wasted worrying about where you think the FX market will go. This is where we come in and help.

Put simply, we keep things easy and hassle-free for you, freeing up your time to focus on the (arguably) more important and ever-changing aspects of your business whilst taking away the stress and worries of having your profit margin eaten away.

How can we achieve this?

Many startups don’t consider their FX exposure to be an integral part of their business and just opt to use the bank. Not only is it typical of the bank to charge 3-4% on transactions each time, but the banks will not keep you in the loop about the foreign exchange market to help make informed decisions. To us, you are not simply a number on a spreadsheet and we guide you through the tricky world of FX – we like to say you can view us outsourced employees for your FX requirements.

Another key point to understand here is that your business is not a speculative FX trading business and nor are we. There are risk takers in this world but when it comes to the FX market, there is no telling where the market will go. It is, therefore, blind luck as to whether you end up on the right or wrong side of the market movements.

The final thing to understand before we go into examples of managing risk properly is what a Forward Contract is. This is where we can guarantee you today’s rate for the future. So, if Pound/Dollar (GBPUSD) is 1.42 and you want 1.42 guaranteed for a payment that is due weeks or months in the future, we can make this possible. You pay us a small deposit of the amount you want for the future, we buy the currency for you now at today’s rate, and you get access to those funds on the agreed date of settlement.

Forward contracts

This takes away all possibility of rates moving out of your favour and making it more expensive for you.

Let’s go through some examples:


Suppose you import products from abroad and have regular monthly payments; the frequency and amount of which you are very confident. The first thing you’ll need to work out if your budget rate. A budget rate is the rate at which you know, come the end of the year or month, tied in with all other financial costs, you will not be making a loss; at any rate better than your budget rate, you will be making a profit.

Budget Rate

For example, suppose your budget rate for Pound/Dollar is 1.40. Currently (at the time of writing this), the rate is around 1.3950, having recently dropped from 1.42. This perfectly illustrates how you could have fixed your rate at 1.42 and enjoyed a year’s worth of imports at a rate of 1.42, above your budget rate and in the black. However, now you face a rate of 1.3950, 1.8% down from the highs seen literally one week ago.

1.8% may not sound like a huge amount, but to a startup with £250,000 exposed to foreign currency, that’s a difference of £4500 – this could amount to months of manufacturing costs, for example.

So, if the exchange rate is above your budget rate at a given time, and you’re confident of the payments to be made, what’s stopping you from purchasing all the currency you need in one go to pay your suppliers for the year? This guarantees you a profit and is a simple way to take all foreign exchange worries off your mind for a whole year.

If the exchange rate is below your budget rate at a given time, this is where a risk manager, such as ourselves, can help guide you to the best solution. We’re experts in this area and can inform you about the current situation in the FX market for you to make an informed decision on where to go from here.

If you’re slightly less confident on the regularity of your imports or you still want to scratch your risk-taker itch, you can still hedge 60, 70, or 80%. This is something we will talk to you about to find out exactly what the best strategy is for you.

What if your payments are less regular, such as those with a customer order-based business model or if you’re uncertain of your foreign exchange exposure over the year. What we suggest here is to simply purchase the currency as soon as the invoice hits your desk if the exchange rate is above your budget rate. If it’s below your budget rate, seek our help.


Now we’ll consider an exporter looking to repatriate profits made overseas. The process is very similar to managing risk as an importer. You’ll have forecasts as to what sales you expect to be making abroad. You can hedge a large portion of this, leaving some room for changes in sales forecasts. This will give you guaranteed profit margins and cash flow margins, making your life much simpler.

Let’s consider an example to show just how significant foreign exchange risk can be using the biggest and most famous startup in the world: Uber. Uber is, of course, a huge entity operating all over the world. As such, a huge portion of their revenue will be in other currencies and will need to be repatriated back to the US and exchanged into US Dollars. Currency volatility will, of course, have a huge effect on their actual take-home revenue.

Uber availability

[Source: https://ride.guru/content/newsroom/how-to-drive-in-different-cities]

Uber’s revenue in 2017 was $7.5 billion. For 2017, the disparity between the top end and bottom end of the Pound/Dollar rate was 11% across the year whilst the difference for the Euro/Dollar rate was 14%. This means that the potential difference in revenue was $825 million for Pound/Dollar and $1.05 billion for Euro/Dollar. These are only three currencies mentioned in a multinational company.

Whether you are a large-scale entity or a small startup hoping to reach the size of Uber, it’s crucial to manage FX all the same.

To conclude, make sure you adopt the growth mindset. Be willing to adapt and prepare for future events. This will help you be more efficient with your time and, in reference to how we can help, be free from the perils of the FX market.

If you would like to talk with us in more detail about anything mentioned in this webinar, you can book a free one-to-one call with one of our experts. It’s easy and it’s free, so why not?!


Share this case study
Set yourself up in minutes, make payments the same day: it’s free, easy and without obligation.