Even the most diligent investors are often surprised by apparently solid business startups that fail, while others succeed, despite the odds.
In my own experience as an investor, I have concluded that success is more about the people than the product. The best founders operate with a key set of internal principles that allow them to break through all but the toughest business obstacles.
I found this perspective validated in a new book, Plan Commit Win: 90 Days to Creating a Fundable Startup, by serial entrepreneur, strategic consultant, and fellow Inc. columnist Patrick Henry. He cites several studies, in addition to his own experience, that highlight the following key people drivers to business success.
1. Founders need to be driven by impact rather than money
This is an emerging theme in the past decade as investors learn that customers assign more value and loyalty to business owners who display this attribute.
The result is a win-win-win situation for investors, entrepreneurs, and customers alike. More value delivered and success for all.
2. Extraordinary commitment to a chosen path
Other studies indicate that a top reason for many startup failures is that the founders just gave up too early. Owners with the strongest commitment to their solution or cause never give up, and often break through obstacles to success that would kill the rest of us. Don't be afraid to stay the distance.
3. Willingness to adjust, but not constantly adjusting
There is indeed a fine line here, between stubbornly sticking to some pre-conceived assumptions, versus changing course based on today's complaint.
Every startup I know has pivoted at least once, but successful companies make each of these a well-planned and well-orchestrated effort.
4. Persistence and patience with timing mismatches
Solutions that imply a paradigm shift always take longer to sell, and more money for marketing and education than expected. New business owners with this challenge need more patience and persistence to survive.
Changing economic conditions and political changes also cause timing issues.
5. Willingness to observe, listen, and learn
Business success is all about two-way communication, between you and your customers, investors, partners, and internally between team members.
Social media and other channels provide the vehicles, but everyone has to be open for the process to work. Use active listening to learn the most.
6. Develop the right mentoring relationships
It's easy to assume that your best friend is also your best mentor. But a real mentor will tell you what you need to hear, rather than what you want to hear. Find someone with complementary business knowledge, and the time to help, with your trust and respect, Document your objectives and talk often.
7. Leadership with general and domain knowledge
The grass always looks greener on the other side of the fence. Don't start your business in a domain where you have no experience, even if it looks like a sure-fire success.
The rules for success in any given business are not in the back of the book. Instead, find a partner with domain experience.
8. Implement "lean startup" principles
The lean startup methodology, popularized by Eric Ries about ten years ago, expedites new business success through iterative solution cycles, focused business experiments, and validated learning.
Investors avoid startups that are in stealth mode, long development cycles, and an inflexible business model.
9. Balance of technical and business knowledge
According to one study, teams with one technical founder and one business founder raise 30 percent more money, have 2.9 times more users, and are 19 percent less likely to scale prematurely than technical or business-heavy founding teams.
Two heads are almost always better than one.
Of course, these principles all work best in the context of a comprehensive overall plan (documented for effective communication), being executed by a committed team, and supported by the right investors.
If you can put technology aside long enough to focus on these principles, you too will find the funding you need, and beat the odds of success with your new venture.