How Can You Save Your Struggling Startup?
I spend a large percentage of my time working with struggling startups these days. Interestingly enough, the idea the company was started with is usually not the problem.
Most of the time, the problems are fixable if the CEO takes action quickly. Sadly, many times the CEO waits too long and the company gets caught in a death spiral.
What’s a death spiral for a startup? It’s not having enough runway to solve the problem. Then, there’s nothing anyone can do.
Sometimes, I see CEOs talk themselves out of getting the help they need when there is time to save their company. This is maddening to watch.
Here are the fixable problems I run into time and again:
A. Founder problems.
Well over 50% of the companies I work with have founder problems. In fact, I think the number is closer to 70% than 50%.
I don’t think this should be a surprise to anyone because founder relationships are like a marriage, but with the extra added stress of severe financial issues and execution issues.
Usually these relationships are not recoverable. Then it’s a matter of agreeing to a fair settlement. The smart CEOs get a lawyer to help negotiate the settlement agreement.
B. Employee issues.
Are you seeing a theme here?
It’s really hard to build a team from scratch. Sometimes you end up hiring people that aren’t A players.
Inevitably, hiring weak talent comes back to bite you. You have to move these people on if your company is going to survive.
I know you may feel obligated to these early employees. I get it. But you have a responsibility to the really good employees you have, and you risk these really good employees leaving if you do nothing.
C. Messaging issues.
One of the toughest things for any company to get right is its messaging.
How important is having a crisp message that immediately tells your audience their in the right place?
A great message is the difference between getting more funding and shutting down the company.
A great message is the difference between customers buying from you or choosing your competitor.
A great message is the difference between that great new hire joining your company or staying at their existing company.
You get the idea. A great message is critical to your success (read: How To Successfully Pitch Your Business In One Slide)
D. Management issues.
You know the old saying, “The devil is in the details.” Well, it’s true. The devil is in the details.
As obvious as this is, you still need to have the discipline to relentlessly follow up on the smallest of details. The successful startup CEOs I work with all develop an appreciation of the importance of detailed follow up.
Detailed follow up is critical to every area of your company. You know that big deal you’re on the verge of getting? Detailed followup will likely be the difference between you winning the deal or losing the deal.
You know that key project you need to release by the end of the month? Detailed follow up with the team will keep the project on schedule.
Detailed follow up is critical to your success (read: How Do You Win Really Big Deals?)
E. Financial planning.
It’s amazing to me how many startup CEOs don’t do any financial planning. I always refer back to the same analogy.
I ask the CEO, “Would you stay on a plane if the pilot announced before take off that their navigation system went out, but they were going to give it a go anyway?”
The answer you wouldn’t stay on the plane. The same analogy holds for building a company.
Your financial plan is your guidance system. Yes, it will not be completely accurate, but with time and iterations your financial plan will help keep you on course (read: How Do You Know It's Time To Hire Your First Employee?)
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