Is Your Startup Prepared for Success?…
Tech startups are known for their dynamic environments, rapid growth potential and the ability to innovate and disrupt established markets. However, despite the enthusiasm and potential, most startups fail to achieve long-term success. Understanding why they fail is crucial for founders who want to avoid common pitfalls and increase their chances of building a sustainable business.
Getting started can be an overwhelming challenge, and there will always be tasks that just didn’t get done or were done poorly. This can be because the founder wasn’t aware of their importance, didn’t know how to do them properly, didn’t have the time, couldn’t afford the help or all the above. This isn’t so much a problem as remedial actions can be taken when more time and resources are available, often when people join the business with the required skills. However, all the items listed below must be addressed relatively early if your startup is going to stand a chance of success.
Put the Basics in Place
There are some things that every tech startup must have in place right from the early stages. Having a vision for the business that everyone can get behind is not just important, but is a first principal foundation to build upon and is a cultural cornerstone. Setting goals for the business that align with the vision and then planning how they will be achieved, with key metrics to measure performance, is the framework for success. That is the roadmap to success and although the execution may be hard, the path forward is not a hidden secret.
Focus on Key Metrics
This is your dashboard that tells you how you are progressing in pursuit of your vision and will reveal any gaps in capability and resources that need to be plugged. Importantly, it tells you when you hit important milestones so you can celebrate achievements with the team to help them stay focused and motivated. It is up to the founders to ensure all the conditions are in place to achieve success and work with the team to track progress and adapt plans accordingly. Not getting distracted by vanity metrics is just as important as focusing on the ones that matter. Startups tend to hit difficult times when execution of basics tasks is either absent, lacking in some way or plans are poorly communicated.
Be Consistently Fair and Not a Jerk
Being prepared for the tough times when they come, because they undoubtedly will, is going to be the thing that sets you apart from other ambitious founders. It’s not uncommon for startups to fall by the wayside after an initial promising start. Financial prudence and preparedness help get you over a shortfall in sales. Psychological preparation may help you to be emotionally consistent and resilient in the harder times. When dealing with difficult situations and team challenges it is important to avoid knee-jerk reactions. Being a founder with a cool job title, but a questionable taste for company branded hoodies, does not give you free license to act like a jerk, so don’t do it!
Stay Lean
Make sure you have enough capability and capacity in the team to grow the business and service customers, but not so much that you have to start letting people go if your sales stagnate. You must always have a lean team in the early years and never allow hiring to get ahead of cashflow. Staying calm in all situations is the best way to navigate stressful periods, especially as you want your team to stay focused and not panic. Always maintain a consistent approach and prioritise moral and ethical behaviours based on fairness, especially when employees are concerned. Never allow financial issues or greed to corrupt your culture because once you do, it will never be the same again.
Invest Appropriately in Marketing and Sales
Early-stage startups have small teams, the goals are clear, and everyone is hyper focused and energised. Usually, the goal is super simple; win that next customer so you can put cash in the business. If a startup is disrupting its market and has a compelling offering, the chances are it will at some point begin to grow relatively quickly, as prospects believe in the benefits to be gained.
This is both good and a potential challenge, because it gives founders a false impression that all is well in the world and there is no reason why growth would ever stall. Until that is, the opportunities either start to run out or sales fail to convert them. Selling in the B2B tech industry is a minefield, with stretched lead times that depend on trust, and it takes time to build up your brand awareness. Marketing and sales activities must be fully supported, financed and resourced to drive continuous revenue growth.
Stay on Track
One of the most significant reasons why startups fail is a lack of focus before the business has even scaled. This is usually an own goal and inexcusable. The business must learn to be as effective and efficient as possible, so that it can drive revenue and move towards profitability or at least demonstrate the potential to do so. This is critical to building a sustainable business and securing funding. Building the muscle memory of generating leads, winning new clients and optimising these processes together as a team is what brings future growth.
At such a delicate phase in a startup’s lifecycle, when resources are still constrained, anything that detracts from the core business is a problem. Startups generally survive by selling first to known contacts within personal networks and picking from the low hanging fruit of early adopters in the market, who are ready to buy. When these easy pickings run dry, things can get tricky. This could be when you learn that the market appears to be indifferent towards your proposition, as forecasted deals in the pipeline extend for no apparent reason and nobody is buying anymore. Everything gets harder when you can’t see where the next deal is coming from. The less you focus and invest in marketing and sales, the quicker this situation will present itself to you.
Continuously Improve What You Already do Well
If you took your eye off the ball in pursuit of a new idea (shiny new toy syndrome), ignoring the fact that your core offering is what you built the business on, then you just turned off access to your main supply of new business. As a startup, you simply don’t have the resources or luxury to entertain new concepts and distract yourself and the team from scaling the existing business, which is hard enough a job to do as it is. When startups begin spreading themselves too thinly, they risk neglecting the core product, customers, marketing and the sales channels that brought early success, putting the entire business at risk in the process. Instead, focus on improving the product while refining and investing in marketing and sales processes. Only by doing this well is there a chance you may one day acquire the resources necessary to seriously consider adjacent or alternative markets.
Scale Before You Embark on New Ideas
You must always deliver on the promises you made to your customers and continually improve their experience and satisfaction. Investing in the areas that drive growth is necessary to increase overall business performance. Regardless of whether any new idea is a good one, it will be a huge distraction away from the core business if you feed it oxygen. This is not something you can do at a time when focus on marketing and converting sales must be magnified and continually resourced if the business is to scale. Any foolhardy expeditions into the unknown, no matter how well calculated you think they might be, must be shelved until the business has achieved scale with stability and is proven to be self-sustaining.
You may want to read: “How to Define Your Target Market.”
