Bad Timing Hurt Pets.com. Dodgeball.com Had No Strategic Plan. Be Aware of the Procession of Startup Pitfalls.
Grow Your Business, Not Your Inbox
The likelihood of startup survivability is low. Only about 10 percent of companies who set out to survive will actually see the light of day 10 years later.
This isn’t meant to dissuade you, but rather prepare you for the chaos -- the unplanned change -- that oftentimes “just happens.” Hey, Murphy (of Murphy’s Law infamy) gets bored, too.
Yes, founding a startup or the next killer tech app that requires zero overhead is the best way to start raking in the dough. However, getting there is the challenge as startups fail for a number of reasons. Luckily for us the reasons are common, which means we can anticipate them and with anticipation comes quantification and qualification.
Related: 10 Deadly Startup Mistakes to Avoid
In other words, when we anticipate the (un)likelihood of event XYZ occurring, then we can also gauge our (un)likely response to it. We can quantify the resources we need and qualify their feasibility.
Being aware of the procession of pitfalls to which founders fall prey is the first step to avoiding them. Here are five to be aware of (in no particular order).
1. They move too soon.
Ever heard the saying, “"being early is the same as being wrong?” This is when the passion and excitement of starting a small business overwhelms the pragmatism of actually planning it out. Pets.com is the perfect example. The pet supplies market is a huge (read multibillion dollar) market today, but pets.com arose during the dot com boom -- and failed. They didn’t fail because it was a poor idea, it was just bad timing. Timing is everything. Speaking of ideas...
2. Not every idea is created equally.
An idea is great, but an idea without execution is just a dream. Take dodgeball.com, for example. The location-based social-networking service was founded in 2000 before it was acquired by Google in 2005, with its demise brought on by the fact that there was no strategic planning for why users would want it.
Facebook wasn’t founded until 2004, which meant that staying abreast of what friends were doing wasn’t important. Moreover, dodgeball.com users had to text their location every time they wanted to update their location which meant an added expense to their phone bill.
3. They have the wrong team.
Not all teams are created equally, and one thing that defines an effective team is the chemistry that binds it. Competencies can be learned, but personalities determine fit, and fit is what constitutes the chemical "magic" that determines team effectiveness.
Just think of the last team you were a part of where everybody got along except one. There’s always “that guy” who slows down the stages of team development, and when that happens, it’s time to let him (or her) go. Fit is everything. Hire for fit, train for competence coach for performance -- that’s the recipe for success.
4. They’re not students of the game.
Marshall Faulk, former NFL running back, was known for his sixth sense. He watched game footage and replays to study two things: the competition's reactions and his own teammates' reactions to them. As a result, he built up such contextual awareness that he was able to predict players’ next moves.
Similarly, startups who don’t study the market or their competition soon fall, because they lack contextual awareness. If entrepreneurism is your game, study to be an A student.
5. They’re not in it to win it.
Founders who lack passion simply don’t have the fire that fuels them through tough times. They lack the wherewithal to slap Murphy in the face and say, “Not today.” If it’s making money that motivates you that’s fine, but beware that money comes and goes. Passion doesn’t. Leverage your passion to fuel your financials -- and you'll never tire out.
Knowing what failure looks like is the first step in mitigating it.