All startup founders have that nagging fear that clutches them from the moment they decide to invest in a new venture: What if I make an embarrassing, costly mistake? Yet while we all stay watchful for potential slip-ups, there's always a chance one might sneak through and damage our business's future prospects.
Tesla CEO Elon Musk knows what this is like. After Musk boasted in a tweet last month that he had secured funding to take the company private, the Justice Department launched an investigation of Tesla. On the day of Musk's tweet, the electric car company's shares saw a spike, but ultimately its stock price dropped again (and Musk subsequently abandoned the dream).
None of us want to be the bearer of bad news. It's even worse to be the cause of bad news, as Musk is surely realizing. Founders have to be hyper-vigilant of any mistake that could bring them or their companies down.
Look at John Schnatter, founder of pizza chain Papa John's, who has found himself at odds with his own company. After a series of politically charged statements got him into hot water, the company removed him from advertising material and revoked his office space at the company's headquarters.
This story is unfortunately quite common. Founders like Michael Dell, Dov Charney, and Aubrey McClendon have been famously ousted by the companies they created. As unfortunate press, poor business decisions, and even self-interested actions show, being a high-quality founder doesn't always lead to being a high-quality CEO.
It doesn't even always boil down to a single poor choice. In some cases, your strengths simply don't match up with what your company needs. In addition, no company can survive a founder who works more for him- or herself than the business that founder is trying to build.
To avoid getting the boot from your own business, avoid these costly mistakes:
1. Letting your skill set veer from what your business needs
Just as your business should never stagnate, neither should you. While a single great idea can certainly help launch a company, it won't translate into solid plans without proper training.
Engage in your own continuous education to ensure your understanding grows alongside your business. I've found it helpful to surround myself with mentors and advisors outside of my company. You can learn from the experience of successful peers in your industry.
For nontechnical founders, take time to learn the inner workings of any software involved in your offering. To properly sell a product or service, you need to understand how it works. Likewise, devote time to working with and learning from the various departments in your company so you can tie grand plans back to the specific execution you'll need to pull them off.
2. Being ignorant of industry trends
Your business doesn't evolve in a vacuum. It shifts in response to the market, developing along with competitive offerings. Nothing will lead you to a mistake faster than turning a blind eye to the changes in your industry. To keep up, I read a ton of industry news, attend conferences, and focus on networking with others in my industry.
You too can prevent this knowledge gap by absorbing all of the research you can, both from your own company and outside sources. Dig deeper than the executive summary to consume details on any trends that might impact your current business trajectory. Use an app like Feedly or Pulse to keep yourself up-to-date on any news alerts, and read materials from major influencers. Staying informed will help you steer your ship away from danger.
3. Not realizing that all press isn't good press
It's clear that Musk has everyone's attention--and a reputation to maintain. He should be cautious about how he presents himself. This is true of all founders who act as the face of their company.
A founder who's constantly getting bad press will sabotage his or her business's success. For instance, someone who's a little too vocal politically can drive customers away.
It should be clear what topics are safe and which ones should be avoided, but in case you accidentally find yourself in a tricky spot, make sure you've got a crisis team in place. This means having a designated spokesperson, an alert system that will tell you when a blunder has occurred, and enough savvy not to escalate a smaller problem with an improper response. With a level head and the right outside advocates, you might be able to steer clear of rough waters.
By looking outside your own interests and making sure you're doing your best for the company rather than just yourself, you'll be in the best position to ensure you maintain a strong relationship with the business you've built.