I receive too many calls from founders seeking help after they've made a devastating business decision. It's sad in general, but especially since many of the mistakes that commonly take down a business are avoidable. Had these entrepreneurs sought help from a seasoned business coach and a mentor sooner, their businesses could have thrived.
Here are only a few examples of missteps I hear about during these disheartening conversations. Most of these problems are caused by the founder getting trapped in fear that causes them to take too many risks or jump ahead before planning and preparing for growth.
1. Confusing management with leadership.
A successful leader is an idea machine. He or she inspires others, sees the vision, makes connections and secures funding for the company's continued growth. These are not the same qualities found in a good manager. When your company is in its initial startup phase you may be able to handle all of the functional roles, but it's a fatal mistake to believe you can continue to do so.
To remain on the path to your long-term vision stick with leading, not managing. Leave execution to someone who's great at it.
2. Waiting too long to seek next-round funding.
Once you've secured a pre-seed or seed round of funding you'll have much to prove. Many founders sit back and breathe freely when the first round comes in; there can be a false security at this phase. I've seen many (if not most) go out and rent expensive, stylish loft spaces and invest in fancier technology than necessary. Most often, they end up moving back to their dining room table within a year.
Venture Capital firms that invest in later stage funding are more risk averse than your early stage or pre-revenue investors. It usually takes much longer to attract them and to get through the process. This is a pivotal point for startups so have your action plan for next round funding in place and ready to execute earlier on than you may have intended. Give yourself a bare minimum of six months so you don't run out of money.
3. Seeking publicity before you're ready.
Just last week I heard from an entrepreneur who has a very promising business concept related to the wedding planning industry. Sadly, that's about all she had--a concept, yet she sought publicity well before she was ready to accommodate the opportunities it brought her way.
This individual compounded her problem by investing in expansion after, rather than prior to, gaining national publicity. With disappointed prospects around the country, her reputation took a hit and growth is at a standstill.
If you're going national with your PR, be ready for it. Otherwise, remain local. But be certain you're well prepared for even this lesser level of growth.
4. Letting inventory get too low.
This is a common problem for entrepreneurs who import product from overseas. Just one container of product can cost a small fortune to bring over, so business owners often let inventory get low. Once they recoup their investment they turn it around for the next order.
I once worked with a handbag designer whose container got delayed at port for two months. She literally ran out of product and continued taking orders from retailers, only to fail in fulfilling them.
Keep your customer list manageable until you have the financial resources, and the warehouse space, to keep a healthy inventory. This is a big topic, with inventory being only one of the issues, but it's an important one.
5. Waiting too long to hire.
This is an issue with practically every business owner who comes my way. The extremely limiting belief that you cannot afford to hire will delay or prevent your company's growth 100 percent of the time. I just brought on a new client who does all of the client work himself. He barely scratches by financially and is approaching burnout. No worries, in similar situations clients get to double-digit monthly income quickly, and so will this one because he reached out for help before it was too late.
Someday, that big opportunity will come your way and you will not be able to sustain the growth unless you have the resources and manpower to manage it. Failure to deliver is at the core of many business closures. Once you release some of your workload to a contractor or employee you will easily find new business to support the additional expense. Believe in yourself and just do it.
6. Not letting go of the reins.
I am close to someone whose co-founder holds the position of CEO at their rapidly growing company. This was fine when they were experiencing low seven-digit revenues, but the company has since outgrown the CEO's experience and capabilities. Significant opportunities are falling by the wayside, or being mishandled because the CEO is unwilling to relinquish his seat to a more experienced individual with a proven track record.
While many early-stage founders can succeed in growing with their companies, it's important to recognize if you are not one of them. Stepping down is never easy, but always opens doors to the next amazing opportunity.
7. Lacking in agility.
You may have a very specific action plan to achieve a very specific vision, but it can't be written in stone. Sometimes things don't pan out as you'd envisioned, and you'll have to change course quickly. If you become stubborn or paralyzed, when something fails you will stall out. Fix the problems (fast) and pivot. The process is daunting, but don't be afraid of making these mistakes, because you will. Success never comes failure free.
You don't have to reinvent the wheel. Perhaps your company is unique, but the startup experience is not. Mistakes are made, failures are had. Reach out for help before, rather than after you experience the rockiest of roads. Coaches and mentors have seen and experienced just about every type of failure; learn from them to pave a more certain path.