It’s common knowledge that startups fail at the whopping rate of 90 percent. For this reason, whatever their differences, startups have a shared and pressing concern, especially during their initial stage; they must successfully claw their way through a rather forbidding obstacle course.
Hire the right people
The culture of a startup is formed when individuals, sometimes of disparate origin, come together to work as a team. Hiring suitable candidates as quickly as possible is critical, as is an ability to tell whether their talents will mesh, because a delay in bringing aboard the right people kills precious time and may lead to a host of complications.
An apt example of this is Shoes.com Technologies Inc., the Canadian eCommerce firm forced to abruptly cease operations at the very beginning of 2017, taking its websites offline and closing its two stores in Vancouver and Toronto just a few years after its founding.
According to Doug Stephens, founder of consultancy Retail Prophet, “Shoes.com suffered from having too few managers from the fashion industry and too many from the technology sector.”
The experience of Shoes.com highlights the importance of hiring the right people.
To do this, go beyond the conventional mode of interviewing prospective employees merely for competence and professionalism, and consider posing questions that relate to personality. The answers to your questions will help you assess the overall value of candidates, and determine whether they would make a good addition to your team.
Also, don’t just hire specialists in a particular field, but jacks-of-all-trades (people who have dabbled in many fields, rather than gaining expertise by focusing on one.) After all, someone who can don multiple hats is an asset to any startup, and can complement the work of more than one department.
Tackle tasks effectively
Smart and effective execution is crucial for startups. You may have a terrific idea for a product or service, but the startup will not gain the necessary momentum without effective task management.
Poor execution of tasks may hold back your product or service from getting built or delivered on time. After all, certain issues demand priority, while others can be put on the backburner. It is imperative that you successfully distinguish between the two.
To hone such a skill, keep abreast of the latest developments in project management and techniques, including agile practices, product delivery mechanisms, and everything in between. This will help you juggle and delegate tasks effectively.
Just like too many cooks spoil the broth, too many managers weaken the team by acting as centrifugal forces.
Multiple managers bring to the table their own separate and sometimes conflicting strategies. This translates into chaos and confusion, and does nothing but increase the burn rate. The result? A startup may end up losing potentially huge amounts of money before it breaks even and begins turning a profit.
If you want optimal growth for your business, you need a team with a balanced mix of managers, marketers, and engineers, as opposed to a plethora of personnel belonging to one or the other group.
Sharpen your vision
“Chase the vision, not the money; the money will end up following you.” - Tony Hsieh
More often than not, startups fail because they don’t have a compelling value proposition or a clear vision. An example of this is startups launching a product that users aren’t ready to buy yet because it is ahead of its time.
A case in point is that of GoWalla, a location-based social network that started in 2007 but faltered within five years, and was acquired by Facebook for a pittance. Apart from having to contend with competitor Foursquare stealing the limelight, the company created a mobile web app even before checking-in became user-friendly. This proved to be a disaster.
Similar issues arise when a startup’s objective is muddled, and when its founders assume that its product or service will work without sufficient market research or a suitable business model. Unrealistic expectations and lack of preparedness for handling the worst-case scenario are always red flags.
Launching a successful startup (instead of just dreaming about one, or getting it off the ground only for it to fail) is contingent on gathering and assembling all the right components.
So what if 90 percent of startups fail? There will always be the other 10 percent that succeed. Absorb the lessons of their success in order to move ahead. With a carefully thought-out plan in place, any startup can, in theory, join the exclusive “unicorn club.”
Feature image via Stockvault.