5 Leadership Mistakes to Sink your Startup

Entrepreneurship and startups are all the rage these days. It seems like everyone owns their own company and is a “CEO.” However, simply opening your own business is not necessarily a solution for success nor is having a passion for it. No, you need a ton of skills to make it work in the long term.

According to Henry Kanapi’s article 15 Entrepreneurship Statistics That You Should Know new businesses failure statistics are: 46% of businesses fail due to incompetence, 30% due to lack of managerial experience, 11% due to lack of experience, and the rest were attributed to fraud, natural disasters and neglect.

The 30% due to lack of managerial experience essentially speaks for itself. However, the 46% due to incompetence and 11% due to lack of experience I would argue falls can be lumped together with the managerial statistic and simply label it as 87% due to failure of leadership.

Remember, as a leader you are responsible for everything in your organization. An employee doesn’t know how to use your company’s software — you failed to provide training; employees don’t make sales — you failed to motivate them; the organization is not following your vision — you failed to communicate it properly. Get the point? As John C. Maxwell says everything rises and falls on leadership, the chart and my comments support this statement within the context of startups.

So why do they fail due to leadership? Well being apart of a failed startup and witnessed others from a distance I have a few reasons as to why “leaders” of startups sink their businesses.

  1. They don’t communicate. I get it, small business is tough (heck this is one!), you have to do it all. You are the CEO, CFO, CMO and any other C / O title you can think of. However, you also have a team who is working for you. Failed startups often fail because the owner does not communicate with the team. They hide in the corner, put their head down and go to “work.” Unfortunately, they are cutting out their largest asset — their people.
  2. They think they have all the answers. Leaders who destroy their startups often think that they have all the answers. When leaders believe that they have all the answers they isolate themselves from their people, their people stop communicating (see point above) and all flow of information, ideas, and recommendations comes to a complete stop. When this happens the organization cannot grow and becomes relevant.
  3. They don’t listen. Leaders who sink their own startups also don’t listen to their people. People are the backbone to any organization and their ideas and thoughts is what makes an organization operate and develop. Startups are often in a constant state of change. There is a ton of work to get done, from developing the product/service, the marketing plan, to billing and administration. A startup needs to learn how to achieve the required effects yet one person cannot have all the answers. Therefore, good leaders need to listen to what their people have to say. Failure to do that will sink your organization.
  4. They try to do EVERYTHING. Leaders who sink their startups simply try to do everything. They believe that they are the only person who can achieve what needs to get done. This leaves the rest of the team with meaningless tasks which destroys their motivation and inspiration. Once the people of an organization is no longer motivated the organization is set to implode.
  5. They use the wrong titles. Whilst this may seem like an odd point it is valid. There seems to be “CEOs” all over the place these days. However, they are only responsible for a whole 5 people with no shareholders. Frankly, titles do mean something and when you hold a specific type of title then expectation is that the organization behind you is of a certain size and capability. Therefore, expectations are not managed properly leading to disappointments from customers and partners. Frankly, the title of “owner” is much more respectable than CEO because owners are incredibly emotionally attached to their organizations and are willing to do what it takes to succeed. CEOs are often backed by golden parachutes should things fall apart.

The startup phase of any business is crucial, it is the “make it or break it” time. The time where an organization develops itself and it comes out of its shell. Don’t sink it the watery graveyard of failed startups. Be a leader, know your strengths and weaknesses, and employ your people in a method which empowers them, you and the organization. Follow those tips and staying away from the above-mentioned failures will ensure your success.

Interested in learning more about leadership? Head over to Moving Forward Leadership and see all the resources I have there.