Three common startup missteps and how to sidestep them
The entrepreneurial journey is exciting and excruciating on the same breathe. While the personal and financial rewards from building a successful startup from the ground up is one of the biggest highs, the path to success is riddled with challenges that one must navigate deftly.
90% of startups fail. While 10% of startups fail in year 1, a jaw dropping 70% fail between years 2 and 5. 80% of startups fail from 3 missteps. On the entrepreneurship rollercoaster, avoiding these 3 missteps can be the difference between soaring success and devastating disappointment.
Limited market need
Poor financial management
Ineffective leadership and team
Limited market need: Building a product or service that doesn't meet a burning customer need is a significant reason for failure. To avoid this misstep and increase the odds of success answer three pivotal questions. How important and pressing is the customer's need? How frequent is the need? How willing is the customer to pay when the need is met?
Pro tip: Fall in love with the customer problem and not with your product or service.
Poor financial management: Running out of money including inability to raise additional funding because of inadequate market traction with the product or service is another key reason for failure. To avert falling into this chasm, hyper prioritize initiatives that provide compelling proof points to showcase progression on product-market fit, and attractiveness of business model.
Pro tip: Operate with quarterly OKRs (Objectives and Key Results) tied to building a compelling narrative for customers and investors. Think video games, the goal is to get to next level to power up and unlock new powers to help succeed in the subsequent levels.
Ineffective leadership and team: Weak leadership, lack of relevant skills and poor team dynamics negatively affect cash burn (inefficient return of precious capital) and ability to efficiently garner market traction. To prevent these from being an Achilles heel, leaders should be laser focused on setting priorities (OKRs), identifying skills needed to achieve OKRs, and creating an environment that encourages speed of organizational learning and coordinated execution.
Pro tip: Leverage experienced executives in fractional capacity, and advisors with relevant skills and network needed to achieve OKRs
Consciously and proactively addressing the above three issues significantly increases the odds of success. Remind yourself that every setback is an opportunity to learn, and refine your approach to value creation and acceleration. With this learning orientation combined with persistence, you are not just averting missteps but shaping a path to a future where your startup not only survives but also thrives.
