Disclaimer: please note the following is a collection of personal thoughts. All info is publicly available. The content hereby written does not reflect in any way the position of the company I work for.
Warning! This article contains juicy tips on how to build a successful start-up.
Warning 2! It’s also about avoiding huge mistakes.
20.BE FLEXIBLE. Flexibility and adaptability are key to success. 7% of start-ups fail because of lack of flexibility. They fail to pivot when it’s needed. A pivot is needed when it’s necessary to shift the business model, change the customer target or something else in the value chain.
Flexibility and adaptability to changes are also key characteristics for start-ups that are growing fast and need to constantly upgrade themselves, their model and talent pool. This last point is especially hard: it is very difficult to realize you need specific skills for each stage of a start-up and to lay down employees is always an emotional challenge. I highly recommend The Founder’s Dilemmas to know more about the topic.
Keywords: flexibility, adaptability, start-up, up-start, pivot
19. BALANCE WORK with (REAL) LIFE. You might be tempted to think that working hard is the same as to working long hours. You might think you need to give 200% in order to succeed. Well, guess what? 8% of start-ups fail because of burning out.
Think about yourself and your wellbeing, your family and your beloved ones. Stay with them, disconnect from laptops and smartphones. Be consistent with this approach and you will find yourself smiling more and being more relaxed at work as well.
Hey… it is contagious, so also your co-workers will benefit and learn from it.
Finally, remember that it’s important to share responsibilities. A culture where the CEO or the founder is micro-managing every single aspect of the business is definitely not healthy. Unfortunately, a common mistake.
Keywords: work-life balance, wellbeing, physical, psychological and emotional health
18 CONNECT. No, I am not referring to an online connection, rather to the power of connections and networking.
Leverage your friends, acquaintances, former colleagues, friends of friends to reach out exponentially to millions of people. Ask for feedback. Keep talking about your idea, your solutions for the customers. 8% of start-ups fail because they do not leverage their network enough.
Also, do not forget about your angel investors. Seek out for their advice. Do not be afraid, as your success will also be their success.
Keywords: the power of community, the power of crowds, crowdfunding and social economy, networking, connections
17. RESPECT THE LAW. 8% of start-ups fail because they underestimate the importance of doing business within the boundaries of the law. Each country, each government has its own rules. Make sure you hire — or work closely — with a legal expert, to avoid any unfortunate situations.
You don’t want to get sued and lose all your money to defend yourself. Remember, the law does not consider ignorance as a valid justification.
Also, bear in mind that compliance with regulations can be expensive, especially when you have to pay lawyers to get the proper advice.
Keywords: legal advice, due diligence
16.HAVE A BOLD VISION. AND BE ABLE TO SELL IT. Pitching your idea and your vision is sooo important. If you do not have investors, angels, venture capitalists supporting you, it is hard to think you will have the money to keep fueling your business. 8% of start-ups, in fact, fail because of no financing and investor interest.
PR = ART
You really need to have someone just dedicated to public relations and shareholder management. Usually, one of the founders is focused on managing operational tasks and execution excellence, while the other is building the network and constantly selling the vision, like there is no tomorrow! Especially at Series A stage, you really want someone to back you up with money.
Keywords: big ideas, think big, clear mission and bold vision, public relations
15. RIGHT MOMENT FOR RIGHT MARKET. 9% of start-ups fail when they try to expand geographically.
Say your business is doing well. You are tempted to move onto the next market to take advantage of the economies of scale. Did you do your due diligence properly? Because each country has its own peculiarities.
Always consider to start small with an MVP and then scale up.
Also, consider that acquiring customers in one location does not guarantee you to get the same amount in another location.
Finally, from a geographical perspective, if you work with a remote team is better you figure out soon how to deal with administration, payrolls and such, that can be quite a distraction and time eaters activities for a start-up.
Keywords: MVP, minimum viable product, prototype, geo-expansion, payroll, administration
14. HAVE PASSION. 9% of start-ups fail because of a lack of passion. If you are just passionate about the business, but zero / nada / none about the product and the market itself, you are not going anywhere.
Could you be passionate about, say, toilet papers? Sure, if you cleaned sxxt with your hands for your whole existence! My point is, if you build a product, be also the customer of that product. Know it well, understand all the nuances in the market context you are playing in.
Keywords: customer passion, product passion, market passion
13. PRAY FOR THE PIVOT. A pivot has gone bad. This happens to 10% of start-ups.
That change in strategy did not work. Those customers do not want your product. This market is not the right one.
Your product sucks.
Cum granum salis, but also with mucho finger crossed, prepare your launch well and do not lose hope when everything seems to go bananas. Fall, rise, come back stronger.
Try harder, or dying trying.
Note that pivoting for the sake of pivoting is not a good idea. It should be a calculated step, where hypotheses are tested and results are measured. Build, Measure, Learn. That is the mantra of the Lean Start-up methodology. Buy here The Lean Start-up by Eric Ries to know more about it.
Keywords: problem/solution fit, problem/market fit, business model canvas
12. DO A PERSONALITY TEST. When I was part of the corporate accelerator at Start-up Bootcamp, the top European accelerator for start-ups and corporates located in Amsterdam, I did a personality and team test, to see whether the team members were a good fit or not. We also had a moderator and a couple of psychologists to help us solve potential conflicts. One of the best things ever. Did you know that 13% of start-ups fail because of disharmony in the team or with investors?
Founders should choose very carefully their co-founders (no more than three I suggest), and investors! Then, they should also make sure to hire talents that can work well in harmony with the other team members.
Like a cancer, bad behaviors spread very fast.
So, avoid like hell or fire people that simply do not fit. Well, try to educate them and listen to their reason first, don’t be too strict.
Keywords: hire right, hire talents, harmony, team effort, personality test
11. STAY FOCUSED. It is so easy to get distracted. To get sidetracked by your personal problems, by annoying investors or teammates. Being an entrepreneur is damn hard. It’s not a job for everybody. 13% of start-ups, in fact, fail because of lack of focus.
10. LAUNCH AT THE RIGHT HISTORICAL MOMENT. It can happen that you are too early and your product is not good enough. It can also happen that you are too late, and you have missed your opportunity window in the market. How can you tell when the right moment is? Do your homework. Prepare a proper mini launch and ensure your prototype is damn good, even if with limited features. Excite with the WoW effect. From a technology perspective, this is more challenging as customers are craving for novelty, but not all of them are really ready to embrace a new tech not adopted by the masses yet. 13% of start-up fail because of product mistimed.
Keywords: product market fit, homework, due diligence, wow effect
9. BE CUSTOMER, CONSUMER, OR SHOPPER OBSESSED.
DON’T FORGET YOUR CUSTOMERS
This is definitely one of the top rules for me.
What do they want? What do they need? Who are they? Do you really know them? Like, especially at the beginning, do you know your core group of and early adopters personally?
14% of start-ups fail because they ignore customers. They focus more on short term business results, losing sight of the long term.
Keywords: tech enthusiasts, innovators, pioneers, customer obsession, Amazon
8. CREATE EXCELLENT MARKETING CAMPAIGNS. 14% of start-ups fail because of poor marketing execution. Knowing your target audience, how to get attract and convert them to customers is key for any successful business. If you have no idea how to promote your product (you will have to if you want to survive), hire someone who knows how to do it.
Keywords: marketing excellence, hire top marketers
7. HAVE A DAMN GOOD BUSINESS MODEL. With multiple revenue streams, possibly. This is important as 17% of start-ups fail because they sell a product without a proper business model behind.
Those guys create an eco-system which allows their retail side to be unprofitable, fueled by highly profitable cloud infrastructure, third-party marketplace and advertising platform, now more important than Google, with more than 71% of searches for products that start directly on Amazon or Alibaba rather than Google.
- Have more than one revenue stream
- Have more than one channel to direct your traffic ( you can’t rely just on SEO)
Keywords: Google, Amazon eco-system, advertising, cloud, AWS, product search, customer acquisition channels
6. HAVE A USER-FRIENDLY PRODUCT AND DIGITAL EXPERIENCE. Once again, this is about the importance of understanding your customers very well, knowing their needs and desire. Damn, make it easy for them to buy and use your product! 17% of start-ups fail because they have a user un-friendly product.
Keywords: user-friendly, cx, ui, ux
5. HIRE A FINANCE GUY. OR BE THAT GUY. Basically, you need someone to keep your cheques in check, but also someone that can help you price your product in the right way. Well, sometimes it is not even about the premium price you set, but more to live up to the expectations of the customers. If someone is willing to pay you $500 for a product, make sure your product is eccellente and go beyond expectations.
AVOID PRICING/COST ISSUES AT ALL COST
18% of start-ups fail because of pricing/cost issues.
Keywords: price issues, finance, net revenue management
4. STAY AHEAD OF THE CURVE. 19% of startups fail because they get outcompeted. I told you, being an entrepreneur is difficult. Once you proved there is problem solution fit, after realizing there is a product market fit, soon you discover you are not alone. Even Jeff Bezos says this, be customer obsessed but do not forget about your competitors. You and your customers do not live in a bubble.
BE ON TOP OF THE GAME
At some point, you might realize that you need to create an R&D department and fuel it with good investments behind. Continuous research is needed to become the next Apple, Amazon or Google.
Keywords: R&D, ahead of the curve, on top of the game
3. HAVE THE RIGHT PEOPLE TO GET YOUR BACK. If you are a founder that do not know about numbers, hire someone that can balance your lack of skills. If you do not know how to build your product, do not even start your start-up. Delegate power and responsibilities. 23% of start-ups fail because they do not have the right team. So, build a strong one with people that help each other. My personal recommendation is to have at the core of your company an expert in Finance, Analytics, Technology, Business.
Keywords: CFO, CTO, CEO, CDO
2. GET YOUR CASHFLOW IN CHECK. 29% of startups go bankrupt because they run out of cash. Every time you pivot, every time you expand the range, or geographically, every single time you acquire customers and try to retain them, you need to fuel with money.
So, keep your investors up to date, respect the delivery and pray they still believe in you and your idea enough to give you more time by releasing more money.
Keywords: funding, time is finite, cashflow
1.FOCUS ON A MARKET NEED. 42% of start-ups fail because there is no market for their product. 42 percent! The number one reasons why start-ups fail is when the business is following to solve interesting problems rather than serving a real market need.
Here the key questions to answer:
- Who is your customer?
- What is his/her problem?
- How are you trying to solve it?
The biggest of the reveals is also the hardest thing to achieve: building a sustainable, profitable, scalable, healthy business that is solving a real need, to the right customer, at the right moment in time.
Keywords: customer obsession, real pain points, market need, product market fit
0.BELIEVE. To me and many others, really the primary reason why startups fail. This happens when the founder(s) no longer believe in their idea or lose hope in themselves or the team.
Now what? Are you still up for the challenge? After reading these insights, what will you do differently?
Keywords: believe in yourself and what you do
That’s all folks! What do you think about these principles? I am looking forward to hear your opinions in the comment section below.
References, resources, credits:
- This series is inspired by a data-driven analysis ran by CBInsights, about the top reasons why start-ups fail. Something that would not have been possible without hundreds of founders being open share their stories and talk about their mistakes with the world. So, thanks to them and CBInisghts for inspiration.
 According to Recode.