Entrepreneurship is experiencing a romantic renaissance of sorts, a startup spring if you will. Everyone wants to hang a shingle on the back of their budding unicorn. It's culture and it's growth and it's hustle. Starting a business today seems to look really good on a t-shirt. The CEO's and engineers from the minds of which this influx of new ideas flow have become the rockstars of the modern era. We read about them, we follow them and we soak up their advice in order to get out there and CRUSH IT!
Until we don't.
Over the last twelve years I've been a part of building eight different companies, two involved substantial equity exits, four are still running and profitable today, one failed miserably and one is early days in stealth mode. All of them were difficult and it is that difficulty that the romanticism of the current entrepreneurial climate fails to adequately highlight.
A common stat often cited is that about two-thirds of business survive two years in business, half of all businesses will survive five years, and only one-third will survive 10. Here are the five things I wish someone would have told me early on.
1. Actionable goals are everything.
In a business there's generally two types of optics: close range measures and large strategic goals. But when it comes to success, if you boil things down far enough you get to a really basic goal. It might be profit, or a host of other big targets.
You might be tempted, as I was, to advertise this goal and depend on teams to rally behind it and figure out how they can contribute. The fact is, employees need to understand what they're doing daily in order to stay on track. The larger your team, the more you will need to focus on this. The better you can align these daily measures to the overall goal of the organization, the more your teams will feel connected to their work.
2. Mundane metrics are counter-productive.
Building a business is a constant balance. The above piece of advice tells you to translate measures into smaller actions and this one tells you not to go too far. But hey, that's owning your own business. When designing KPI's for your teams, you can't make goals that disconnect people from purpose.
At LeadMD, we found that the average person needed to clock 32 hours in a week to meet our financial goals. If you're on a business development team, goals are obviously aligned to revenue quota. But what also became clear is that everyone must understand it is the value that comes out of those achievements that is the true measurement.
The goals you use evaluate team performance can't become the only thing they can see. Yes, the big goal still needs to be visible, but the way we get there needs to be acknowledged. "I'm doing what you said, I'm working 30 hours!" Sure, but the results suck--projects are pushing, you're churning clients every month, etc. Don't over compensate with very small metrics - context is king.
3. Hiring is the only thing that matters.
Not to debunk some great tactics, but it doesn't matter how you train or how great your culture is. It only matters how you hire people. Don't hire for the skill, etc. Hard skills you can train for. Soft skills, you can't. We hired people with the greatest credentials, and without fail they were terrible. So we had to change our processes. People tell you that resume's matter, etc. Credentials don't mean jack if they don't have the hard to find traits like passion, empathy and problem-solving.
4. Don't get too married to any idea.
Your opinion doesn't matter. The market will tell you if there is a need. We hear a lot of talk about product-market fit, but really every idea should be market validated. You can put incredible amounts of time, money and effort into results that will never succeed--regardless how hard you push. It took me five years, but now 100 percent of my response to new ideas is, "how can we test it?" Rapid prototyping, user testing and market validation can solve any problem.
5. Don't underestimate your own desire to see people succeed, even at your own detriment.
You can't afford to reward anyone if the overall goal is not being met. "What? They are working 80 hour weeks, I must reward them." I get it. But, the really hard truth is that all of a sudden working hard becomes the goal, not results. It's painful. We went through it recently and I had to find a way to restructure our quarterly incentive program while also maintaining morale. The solution for me was to let the team design the program. The only caveat I placed on it was that the organization had to meet it's overall goals in order for the program to pay out. This brought the critical metrics front and center and really allowed everyone to achieve clarity and reality.
Starting a business is hard--most of us knew that going in. However, avoiding common pitfalls others have made can help you succeed faster than the rest of us.