Most new businesses fail within the first 18 months and it’s no different for startups, unfortunately. The following five reasons are usually the most prominent reasons for this. Fear not, there are several meaningful ways to navigate the potholes along the way and manage the process on the road to success.
Startups and their leaders don’t know how to scale
Most startup entrepreneurs approach their businesses by working harder, not smarter, meaning they become their largest asset for getting work done and making a profit. As the business grows, these CEOs are likely unwilling to give up control of their ‘baby’ for the fear of losing control. They end up internalizing their business practices. Therefore, entrepreneurs need to focus on how they can continue to add value, not hours, to their businesses and then find a way to outsource everything else.
Tip #1: Outsource responsibilities to a manager, sales person, or a personal assistant—whatever lets you do what you’re great at.
They’ll be too top heavy
Most new entrepreneurs will eventually make the mistake of leaving power at the top. The idea of giving power to their employees is too terrifying, so they don’t involve them as much as they should. What they are losing is the opportunity to pass on a sense of involvement and instilling purpose in their workers—the very life blood of the business. Leadership should reside at all levels so that entrepreneurs are free to work on their businesses rather than in their businesses.
Tip #2: If you don’t believe your employees have the skills to lead, then work with them to bring out the leader in themselves.
They will fail to create culture in the workplace
Culture is more than decorating for holidays and staff lunches. Workplace culture is about having the employees embody the culture of the company. A company that fails to create culture internally will crumble from the inside, as its employees’ motivations won’t align with the corporation’s values. Once you get clear on what matters to the people you hire and give them opportunities to express that, they become personally invested. You will then have created a compelled workforce with higher productivity, more enthusiasm and lower turnover.
Tip #3: Get clear the values and key messages of the company and incorporate these into your hiring and training process. You will find more than employees, you’ll find common stakeholders in your company.
They will sell on price, not on value
This is a big mistake. New CEOs who lock into an old model of capitalism and only sell on price will always lose to the person who is $1 cheaper. You must get out of ‘bottom line’ thinking and start focusing on value. Value means going the extra mile and committing to customer satisfaction. You can’t buy loyalty with money, but you can build loyalty and lasting trust with outstanding service.
Tip #4: Get your top managers on the front line at least once-a-week, interacting with customers, demonstrating the personal touch, and delivering value.
Organizational leaders won’t take time off
Entrepreneurs know the work it takes to get a business off the ground and running, but sacrificing personal time and balance too often become the norm for CEOs. As the leader of your organization, if you get run down, you simply won’t have the resources to inspire your staff and lead by example. Leaders who fail to self-invest can no longer lead, and they run the risk of losing sight of and motivation for what brought them there in the first place.
Tip #5: Small steps can help: Healthy eating, regular exercise and good sleep should be scheduled along with meetings and other ‘critical’ business activities.