According to Forbes, 90% of startups fail. 90%! That’s a crazy-high stat and I’ve had many experiences in this space working with / for / delivering seminars to hundreds of startups over the years as well as starting five of my own businesses (3 successes, 1 failure and 1 awesome current business). My intent today is to share my analysis of the common pitfalls faced by startups and to offer some tips to anyone who’s either thinking about starting their own business or feels a bit frustrated with the one they have.
Is there a need for your business? I don’t mean whether YOU, your partner or your best mate think it is a good idea. I mean do potential customers want it. I’ve lost count of the number of times someone has poured a significant portion of their money, time, energy and stress into an unvalidated idea. Simon put it very well with reference to Uber:
Uber won because they gave passengers an element of control by offering geolocation tracking of available taxis vs what was a previously uncontrollable situation where you had to call the taxi firm, then call them again to chase them up, and on and on it went. With Uber, you can order your taxi, knowing how nearby it is, simply selecting it by seeing all the information you need. Great! But that doesn’t mean every idea that could use geolocation tech is a good idea.
The reason we see a lack of research happening in the startup world is what I call ‘love goggles’. The psychology is simple. We fall in love with an idea and literally cannot see why it might not work, so we go ALL IN on an unproven idea. This is the number one cause of bad ideas; just because you think it’s a good idea matters not a jot. It is the people who will pay you (or not) that really matter. You know, customers. Then, if you do research your idea, you also need to understand who are your competitors? This is not as linear as people think. Your competition includes like-for-like service providers and also it can be the habits and behaviours of your target market. Say you have an idea to deliver bacon sandwiches using a drone. But what if your target market is turning vegan? This may be an extreme example but still more plausible than what you might think to consider in your competitive analysis. You need to consider how else your target market are currently solving their hunger needs. A pack lunch? One of my favourite phrases is apt at this point: just because you can doesn’t mean you should. Research can be done without spending a penny or creating unnecessary risk in your life.
Do you know yourself well enough to start a business?
This is where so, so, SO many businesses should never had begun as mindset is a massive factor in being your own boss. I don’t mean the ability to learn. I don’t mean you can’t do what all those self-help books say is possible (read The Subtle Art of Not Giving A F*ck as a better approach than the same old, same old self-help books). What I do mean is that your existing mindset is what matters here, and your ability to understand what traps it can set you free.
Example 1 – Control
Each of us feels safest by having control of our lives, and for each of us there is a scale of control we like to have. How controlling you are can be a blessing and a curse when it comes to being your own boss. It’s not simply a question of giving up control or indeed being really controlling. It’s more about knowing when you’re wearing a pair of love goggles and think you’re correct and are lost in that point instead of asking others for their help or opinion. Asking AND listening is a massive gap consistently found in that 90% startup fail zone.
Example 2 – Experience
One of the main reasons businesses fail in the first 12 months is the conditioning of the founder. Conditioning comes from the habits that you pick up during your previous work. What I have found over and over again is that we are not generally aware of these habits. Reflecting back on my own transition from working in large corporations to starting my first business, it took me nearly three years to shake all the restrictions and conditioning I’d amassed. It took half of that time to even realise they existed! I feel I was simply lucky that my background was in Sales and Marketing, meaning I could maintain an income stream with my own business whilst avoiding some (but not all) of the conditioning I had learned – the rules, singular way of working, the productivity, the role focus – in corporations.
Awareness of self is how open or closed your mindset currently is. We all follow rules in a job; would the rules you follow today help or hinder you if you were to start your own business?
In my experience, people with an understanding of people are much better suited to starting their own business, and this is particularly true if the business has a service, sales or marketing context. That’s some good skills to have for sure; the real conditioning you want is to understand exactly what you’re getting yourself into: long hours, lots of challenges with self-belief, fear of uncertain income, and above all else, is your idea any good? Is it needed? Can you prove it before taking the plunge?