Good times are a mixed blessing for startups. Growing rapidly is exhilarating, but you need to conserve some of your energy and resources for the inevitable bumps along the way. It's pretty easy these days to grow your top line in double digits every month--especially when you're starting from scratch--but that's only one metric of many that matters when you're building a business. Getting big quick is nowhere near as critical as getting consistently good at what you're doing and learning to do it well over and over again. And racing like crazy to be everywhere as soon as possible has killed millions of startups.
In these days of quick and easy money, it's easy to get carried away doing the fundraising fandango and running around the country looking for new investors instead of minding the store. That's a good way to end up going nowhere fast. There are lots of people with their own agendas happy to blow smoke and tell you that you walk on water (and how they'd be happy to help you--for a fee or a few shares, of course). You can kid yourself into thinking that all the road trips, pitches, demo days, conferences, and speeches are great marketing, but unless you get back to the basics of the business that got you this far, you could be in trouble.
Catching a Tiger By the Tail
Truth be told, all the motion and activity is often just a way to suppress the anxiety that's part of the startup process. Even while everyone else is hooting and hollering, it can feel like you've got a tiger by the tail and you're barely hanging on for dear life. And very often it's only you and a precious few others who know just how close to the edge things really are. (That technology that looks so slick from the outside may be full of holes and held together with more duct tape and chewing gum solutions than even MacGyver could imagine.) Even more importantly, the kind of rapid ramping of revenues which the new digital economy enables can conceal a host of operational, accounting, and control problems which are guaranteed to come back and bite you in the ass--usually at the worst possible time.
Believe it or not, far more critical mistakes are made by entrepreneurs in good times than in bad times. And many more promising companies are killed by distraction and the inability to handle hyper-growth than starve because they ran out of cash. I'm seeing way too many young companies chasing expansion and new markets before they have a firm and consistent grasp of how to successfully and repeatedly execute and deliver their core business services in their initial marketplace. There's a reason that the smartest entrepreneurs nail it first--and then scale it.
Here are three warning signs that your own ship may be more than a little out-of-control:
1. You've got no middle management. The business was easy when you did everything yourself and made sure it was done right. Now you find yourself looking around for someone to pick up that job and do it with the same passion and attention to detail as you did, but there's no such person in the place. No one's as careful or as committed as you--and it shows, because balls start getting dropped all over the place.
2. You have no idea how much money is in the bank. If you're honest with yourself, you aren't sure how much cash is in the bank or whether the important bills are getting reviewed promptly and paid on time--especially those submitted by the folks who were there for you when you needed a break. Worse yet, you're hoping that someone else does. But guess what? The guy in accounting just wants to process the weekly checks; he's not checking half the things that fly over his desk. And the people in purchasing don't have the time or the inclination to look for the best deal or the smartest deal. They've got a budget, and they're gonna spend it. It's not "their money" anyway.
3. You've forgotten what the customer looks like. When's the last time you met with some of your oldest and best customers instead of bankers, brokers, journalists, and other entrepreneurs? Not only don't you see many of these important customers; you never take the time to stroke them any more either. And they do notice the difference, even if they don't mention it to you. Customers' expectations are progressive and, if you're not improving and building a better connection and relationship with them on an ongoing basis, you won't have to worry about them for too much longer. They'll be gone.