During a forum for small business owners, a tricky question was asked by one of the participants. The person asked what made startups fail. Well, you’ll ordinarily just want to flip the answers. The attitudes that kill startups are the direct opposites of what makes the startups succeed. But that seems kind of big to answer on the fly.
But then, I think this is something that should really be considered. It would be helpful if we are able to look at a situation from all angles. And I think it is much easier catching yourself doing stuff you shouldn’t do than trying to remember to always do things you should be doing.
So, what exactly are the mistakes that kill startups? If we become very conscious of these, it should impact on the kind of attitudes we put towards our businesses that would make them succeed.
Really we have a few things that kill startups. And you should ensure to cut them out of whatever you are doing, for your startups to succeed.
Here Are 8 Attitudes That Kill Startups
1. Marginal Niche
Sometimes when little kids are engaged in soccer, you’ll notice some kids around a certain age become afraid of the ball. Their instinct tells them to avoid the ball once it starts coming near them. So, a goalkeeper may hold his glove up more for protection, close his eyes with the hope of getting a fly ball when it comes by.
Many people who venture into business pick niches that are obscure with the hope of avoiding competition. When you settle for a marginal niche, you are like the little goalkeeper who deals with the ball more by avoiding.
This is the point, if you have good and great business ideas, you’ll have competition. And because of your unconscious fear for competition, you think you are safer pursuing smaller ones. But that is an attitude that kill startups. So, you should rather think about your ideas without necessarily involving yourself in the mix. If someone else was to do a business that would succeed, what would it be?
2. Sole Founder
You should have noticed how a few successful startups have a sole founder. But sometimes, some companies you think have a single founder finally turn out to have about 3 or more.
But is there anything wrong with being a sole founder of your startup? Well, maybe not exactly. But if you could get your friends who know you better and can be sincere enough to join you in a business, you would be at an advantage. And that’s even if they are all wrong about an idea, and you were the only right one; putting out a startup is not a one-person venture.
Even if you could do everything yourself, you still need people to brainstorm together with. You need people that would talk sincerely to you when you make certain decisions that seem funny. You also need people that would cheer you up when things don’t seem to go as planned.
Esprit de corps binds the words together in a way which seems to violate conservation laws. Each thinks “I can’t let my friends down.” It is one of the most powerful forces, and when there is just a founder, it is missing.
3. The Fear To Fail
The fear of failure often portends the possibility that success will not be guaranteed. If you must venture into owning a business, you must be prepared for risks. There is a beautiful life in the city of success, but it only takes the courage to succeed to get you there.
So, ditching this fear, and replacing it with reasons and needs to succeed is a necessary recipe for success in your startup.
4. Poor Location
Having a poor location for your startup is one of the defeating moves you would make especially as a sole proprietor. A business that is not situated in an area where it has the potential to be noticed, accessed, and patronized, is a failed one already.
Do a feasibility study of your planned venture, ask questions, seek opinions, do a proper market survey, that’s only if you’d like to make a good success out of your effort.
Startups move well quickly in some areas, slowly in some other areas, and not at all in some more areas. In the US, Silicon Valley takes the lead, then Boston, Seattle, Austin, Denver, and New York. After those areas, there’s really little.
In fact, New York has just about 20th of startups per capita as is in Silicon Valley. Areas like Chicago, Houston, and Detroit are quite small to measure.
Startups often thrive better in certain locations than others for probably a general reason. Most of the time, it is because that is where the experts are. In such a location, the standard of things is higher than anywhere else. The kind of employees you’ll like to have live there. People are more sympathetic in such areas to what you do. Industries that would support your growth are also there. A lot of these factors work together for the success of your startup.
5. Being Obstinate
There are some fields in life where you are advised to put all your focus on one thing no matter what, for you to excel in it. Well, that can come for things like winning an Olympic gold medal where everything is spelt out. But for a startup, you’ll have to go along the trail.
You do not need to get too rigid to your initial plan. That plan may in fact be wrong, or may have become unfitting with the current circumstances surrounding your startup. Most of the successful startups around actually deviated – whether slightly or totally – from their original plans. Some even do a total overhaul of their plans, that you imagine if it is still the same company! Yes, It may be hard, but you may actually need to discard your old ideas to succeed.
But then, that doesn’t mean you have to be switching ideas every week to see what works. That would be disastrous for your startup. You may consider some external factor to test what would work. Like you could ask if the idea you pose represents some form of progression. If your new ideas still allow you to reuse so much of what you built for the old, then it probably could be ideas that would help your startup to converge.
But if you always have to restart from scratch with your new ideas, that’s very likely a bad sign. You may want to seek advice from experienced entrepreneurs. You should also seek the sincere opinions of your users before taking some new direction. If they get more enthusiastic about your new move, it is probably a good one. But then, make a very good study before switching. And do not ever get too rigid with your old idea.
6. Strong Disagreements Among Founders
It is often very common to see founders of startups in tight disagreements. In fact, in many cases, a founder would be watched leave the team. And this happens a lot of times. Hence, founders are advised to vest so that quitting the team would be orderly.
The fact that a founder leaves doesn’t mean the startup would be dead. A lot of successful startups today actually had that happen. Most cases see the least committed of the team leave the team. So, that may really not be a problem. But if you have three founders, and one guy who has the critical technical skills to exit, then there may be a problem.
And then, that can be survived with timely effort in the right direction.
Most of the fights that occur among startups founders could actually be avoided if the kind of people brought to the team are carefully considered before kicking off at all. The issues are often not due to the circumstances, but about the people. This means that they can be avoided. A lot of people who get burned in the disagreements had misgivings which they initially suppressed when they started the company.
Avoid suppressing misgivings. It is much better when you are able to fix problems or issues among founders before a company kicks off than after. So, you may not include your housemate in a startup as they may actually feel left-out. Do not venture into a business with someone you do not like, just because you find some skills in such a person which you need, and you think you may rarely find elsewhere. While you may be lucky with this, it is however worthy of note that the people in your startup are the most important ingredients, so you just shouldn’t compromise in that area.
7. Poor Management Of Investors
Ensure not to ignore your investors as a founder. You should manage them carefully as they may also have some very helpful insights for your startup. but then, do not allow them to take over the running of your company. You should run your own company. At least, if your investors had that vision to run the companies they are funding, then they should have just started them all by themselves.
If the founders of a startup are actually well knowledgeable with their moves, then they should rather have half their attention on their products or services than to place their full attention on their investors who do not. Oftentimes, the amount of money received from an investor determines how hard it becomes to work on managing them.
If your investors have a majority in the board, they have become your bosses. And on a better note where there is equal representation, and the deciding vote is cast by neutral outside directors, then your investors would find it easy to control the company by easily convincing the outside directors.
But then, if everything goes fine, then you should not worry. At least your main focus should be the speedy progress of your startup. There are investors who just will not care about anything. But startups do not always have a smooth ride. Investors have been found causing troubles for even companies that have succeeded. Apple had their investors team up to fire Steve Jobs which turned out to be a huge error. Even Google had a lot of struggles with their investors initially,
8. Too Little Funding
All startup funding is measured per time. If your startup isn’t profitable, you have a short time for the funds to run out before they are grinded into a final halt. Sometimes, this can be referred to as a runway. People who ask “How much runway is exactly left?”
So, having too little money means that you do not have enough to make you airborne. If you launched significant growth, your investors should be profitable. They are who you have to convince. And if you take just too little from your investors, it is a potential attitude that can kill startups.
If you must take anything from investors, take enough to take you to the next step. You’ll have control over what the next step is and how much you spend to take you there. It is however much better to set both low. Spend practically nothing initially, and create an initial goal to produce a solid prototype for you. This move would give you great flexibility.