It is a sad reality that roughly 80% of all startups will fail within the first 18 months. Just making it past that first 18 months, however, is no guarantee that you will ever shepherd your startup all the way into a full functioning, stable, self-sustaining business. Total system failure can happen at any point and for any number of reasons. While there are certainly some common ones (such as lack of funding) there are also some very critical reasons that might surprise you. Here are 8 unexpected things the might be killing your startup.
1. Investing too much in appearance and not in infrastructure
The conflict of startups is that they are essentially shoestring operations that need to convince potential clients and customers that they are a full-scale operations that can handle all their needs. This means that too many startups fall into the trap of spending more keeping up appearances than building much needed infrastructure. Yes, leasing a suite of offices might make you feel more professional than working out of your garage, but working out of your garage is going to allow you to invest more in more critical needs such as staffing, software, hardware, marketing, and legal fees. Yes, appearances matter, but being able to deliver on your promises means even more.
2. Lack of an evolving, strategic plan
Building a business is much like building a building. Buildings are built by a dizzying array of workers, tradesmen, and teams all working independently on various aspects of the building, but all of the work of one team affects the work of all the others. To keep everyone on the same page, construction companies use plans or blueprints. As buildings are erected, builders come across various problems and issues that require changes to the plans and blueprints, but they actually make the changes to the plans rather than just changing their plans without writing it down.
This keeps everyone on the same page, and many years later, when there is an issue with the building, they actually have something to go back and look at to see exactly where everything is and exactly how the building was constructed. If you don’t have a comprehensive series of blueprints on which to build your business, everyone is going to be doing their own thing, and chaos will quickly reign.
3. Poor partnerships
Just like with the business itself, 80% of all business partnerships will also fail. The best partners may not always work as smoothly together as Ginger Rogers and Fred Astaire, but they sharpen and hone each other to perfection. Partners may have bitter knock-down drag-out arguments, and that is okay too. The question is, at the end of the day, are you focused on moving the business forward or meeting your own selfish needs, wants, and desires. Do you have partners who truly want what’s best for the business, or do they just need to get their own way? Partnerships can make or break a business, so make sure you choose wisely.
4. Poor company culture or lack of company culture
Many people think that company culture simply grows organically as the business grows. And if you let it, that’s exactly what will happen. The problem with this is that if you just simply let it grow all on its own, you have no control over the end product. Smart businesses actually build their culture from the ground up. They weave a strategic company culture deep into the very DNA of the company.
What this means is that over time, it is easier and easier to keep everyone on the same page, rather than harder. When family members grow up together and then go their separate ways, they will all carry with them similar habits, traits, and characteristics, and even have similar values. As your company grows and expands, the same thing will happen. That is, if you have built your culture very carefully while you are building your business.
5. Over or under delegating
As your business grows, so will the people you have available to begin to delegate tasks to. If you fail to delegate, you will quickly become overwhelmed and burn out. If you delegate too much, however, you will quickly lose control of your own startup. The types of tasks that you delegate are also important. If you save all the prime or cherry jobs for yourself, you will quickly find yourself resented by your staff. The same is true if you hand off all of the most unpleasant tasks.
That being said, just because you find a task to be unpleasant doesn’t necessary mean that everyone does. You may have never met a spreadsheet you actually liked, while one of your associates never met one she didn’t fall in love with. Make sure that you are matching up the right tasks with the right person and that you are constantly managing your workload to ensure that it is never too heavy nor too light.
There is an almost never-ending list of why startups might fail. Timing certainly plays a factor, as does the vagaries of the marketplace, as well as simply experience or lack thereof. In some cases, it just takes a few failed startups under your belt to figure out how to get one successfully up and running. While 80% of startups fail, that doesn’t mean that 80% of entrepreneurs do. While no two businesses will ever fail for quite the same reason, there are certainly some usual suspects. Conversely, most businesses also succeed for some fairly similar reasons as well.