Tech company, Andela, has sacked over 400 of its employees. 250 are from Nigeria and…
Five Things That Could Sink Your Company In The First Year
As a serial entrepreneur, I’ve seen my fair share of ups and downs. With those ups and downs come the lessons, and the best education is experience. Most lessons I’ve learned as a founder or an advisor to startup companies were learned the hard way. I had companies in high school and have birthed many ideas since — some that were brought to life, some that died and some that thrived. I’ve made mistakes and watched others make the same ones. Most importantly, I’ve seen companies crash early on due to some recurring circumstances.
Detecting red flags early on can be your saving grace. Here’s what some of those aforementioned scenarios may look like.
Most founders have unique perspectives and sets of skills. However, all partners must have the same vision for the company and the same willingness to work hard in order for it to work. Although disagreements will occur and can be useful, I’ve seen firsthand from coaching almost 500 entrepreneurs that partners must agree on fundamental goals and be willing to put the necessary time and money into achieving those stated goals. The wrong partner is also not ready to make necessary sacrifices, such as eliminating vacations and forgetting the meaning of a “weekend.” And don’t get me started on the “b” word (balance), because there isn’t any at first. If one co-founder is always available and another is taking downtime without communicating it, this creates tension.
Sometimes the partners are external. With joint ventures and licensing agreements, take your time. Don’t ignore yellow flags because you’re excited to get the deal done with the big investor or celebrity partner. These partnerships can be even more catastrophic than internal issues. Make sure all parties are clear on the roadmap, expectations and respective responsibilities.
Face it: You can’t control everything. No matter what you do, even if everything is executed perfectly, things happen. I’ve learned to stay flexible and ready to pivot the micro or macro at any time. A client could go out of business. A hacker could take all the servers in California the day your big press hits. Natural disasters can lead to declining sales. Your main buyer could resign and you have to start all over. You need to focus on the items you can control and be prepared to deal with obstacles as they arise. Preparation means having contingency plans in place. While you cannot control everything, you need to know how to navigate the turns in the road.
Remaining coachable is a key entrepreneurial trait. Yes, you are the expert in your product and space, but you can’t possibly see every aspect of your business. When others show you a new point of view about marketing or positioning, listen. Don’t get defensive. Anytime we get defensive, we lose. Breathe and take it in. Literally anything can happen in the lifetime of a business. Most companies end up in an exit very differently than how they started. Be malleable when outside forces come along and throw curveballs.
Your idea isn’t worth anything. Execution is. If you are truly passionate about your idea and you don’t have firsthand experience in the space, it’s vital that you start off with a co-founder who does. Besides, complementary experience sets you up for success. Launching and then raising money to hire that person rarely works. They need to be heavily incentivized and part of the permanent package in order to start with a great foundation and gain investor interest. I’ve seen many people pitch a great idea, but then they can’t explain a clear roadmap or how to build the product on their own and, therefore, are not the best person to execute and build that particular idea.
This is a two-sided coin. On the one side, you need to have both a long-term and short-term vision and goal for the company. On the other side, you cannot be so focused on how you want your company to look in five years that you ignore the details of what needs to happen now in order to assure the company will be around in five years. Having a great legal foundation is important, but spending all your time too early on trademarks, patents and marketing plans that are more suited for big companies and advisors you think you might need when you scale later is all moot if you don’t get there. Avoid making fear-based decisions out of paranoia for something that doesn’t even have proof of concept yet. Focus on the product you have today. Execute short-term, small marketing items with quick turnarounds, so you can gather the data and pivot them quickly. Stop expecting to become a big company and change the mindset to making sure you get there.
Creating and building a company is hard and takes stamina. You’ll get tired of it at times, no matter what. It’s important to feel energized by your product. When I’ve built new things that were successful, I truly felt in the beginning like it just came out of me. I was propelled every morning and chose to work on it above all else. I was hungry, determined and driven to see it come to life. It’s not transactional like exchanging time for money. The spark might be there, but can you continue to put gasoline on it? Greatness is created from authentic excitement, effort and love for the possibility of your idea being one of the lucky ones that blooms into reality.
Contributed by Rachael McCrary, Forbes Councils Member, COO of BUTTONWallet, the telegram-based Crypto exchange, Entrepreneur and Business Advisor in Los Angeles
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