Five simple ways to kill your startup
A guest blog by our Business Advisor & Mentor Gero “The Startup Skeptic” Weber
You had a dream
your idea that you showed to relatives and friends had them
all excited. These folks encouraged you to start a business. It was like ‘if they like it so will everybody else’ syndrome and you concluded that you stumbled into a market niche.
The longer you thought about the realities surrounding your dream your intensity to act grew. Systematically you constructed arguments in support and in counter-arguments in defense of your ‘baby’ – the startup project.
1. I didn’t have enough experience
Needless to say, you were about to find out the hard way, that starting a business is not as easy as depicted in movies. Even after you have mastered the bureaucratic hurdles in registrations and permits you still faced the daunting task of building a business case – a.k.a. the business plan – to convince other people to join forces with you. Sooner or later the issue of money – now it is called capital – will take center stage.
Let us assume, for the moment, that you cleared that hurdle elegantly, too and let us further assume that you built your first prototype ready to go and you negotiated contracts to have the supply line humming in the future.
Why aren’t the new customers running up to you with bated breath to acquire your fine product?
2. I thought my invention would be an easy sell
Have you allowed for enough time for your potential customers to familiarize themselves with your new product? – have you given them an opportunity to get to know you? – After all, your company is brand new and has no track record.
3. People are reluctant to change what they are used to
Your small staff, it is still small because you were cautious in hiring, is getting antsy. All this time and nothing is really happening while you are running from appointment to appointment to introduce your product. Even its presentation through the internet has not yielded any orders, just inquisitive phone calls.
So rent, payroll, travel expenses are covered by the capital you have set aside. For how long can you sustain this situation? What is your ‘cash burn rate’?
4. I thought I knew everything but didn’t
Now, given the lingering impatience one of the employees you so carefully selected and so far retained with the promise of profit-sharing, will quit after all, putting an additional burden on you.
And, at the end of the months when everything gets tallied up all of a sudden you realize that the salary you would permit to pay yourself comes right out of the capital reserve. You might as well leave it there and admit that you worked for nothing.
5. I forgot to try and make money
What can we learn from this? Get advice early and get it in all areas of business startups. Get a mentor!
Review the assumptions in your business plan over and over again. Stretch the goals (revenue, costs, time-frames) – double them for instance. Is it still a business you want to start?
What keeps you awake at night?
Ask all your advisors and friends this question regularly: ‘What haven’t I asked yet?‘ If they are good advisors with your success at heart, they will volunteer additional insights you might have missed otherwise.
Gero F. Weber is a business mentor, advisor, coach and writer with a background as a controller, consultant, and management director with a career stretching back over four decades. He serves as a business Advisor and mentor to Blue Wave.