You know a business is doomed when you look out the window and the debt collector is about to knock on your door. In reality though there are some simple signs that many small business and start-ups fail to recognise from the very beginning that will lead them into closure and failure. According to Matthew Tukaki, serial entrepreneur and EntreHub Co-Founder learning lessons along the way are important but it’s the pre-work before starting a business that needs to be done for those who are doing it for the first time:
“In my first start-up the realisation was that before everyone had quit their jobs and packed it in for the new venture we just assumed we would be able to kill the market. We didn’t do a business plan or have a real, committed sales and marketing strategy so we just kind of built it and thought the customers would flood us – by month three were arguing with each other because we weren’t making enough to page our wages let alone the building rent.” Tukaki went on to run a multi-billion company and lead five more start-up ventures.
Howard Tullman, CEO of Chicago startup incubator 1871 said something similar but this time in respect of measuring results: “You need to set real metrics, in concrete, and then everyone has to agree to live by them without excuses or exceptions,”
It is something that is again echoed by 4Chan founder Chris Poole: “Although we arguably found product / market fit, we couldn’t quite crack the business side of things.” And this from Blurtt Co-Founder Jeanatte Cajide: “Do not launch a start-up if you do not have enough funding for multiple iterations. The chances of getting it right the first are about the equivalent of winning the lotto.”
And it’s not just about the business side of things that brings a start-up unstuck it’s also understanding the market and therefore the customer as Pumodo Co-Founder Thorsteinn H. Fridriksson said after shutting the doors earlier this year: “Our biggest self-realization was that we were not users of our own product. We didn’t obsess over it and we didn’t love. We loved the idea.”
And what about if the market even wanted the product? Findit CEO Levi Belnap pulled the plug on his mobile search start-up business and reflected: “starting a company and trying to change the world is no easy task. IN the process we learned that the majority of our users did not need FindIt often enough to justify our continued time and effort.”