“Running out of cash does not cause a startup’s failure-it’s merely a symptom of another issue…sometimes it’s the only ‘symptom’ that leadership sees.”
-Steve Hogan, Co-Founder of Tech-RX to Forbes.com
Last year, as part of Leap4Change’s “March Madness” series, I presented a webinar called It’s Not All About the Benjamins. It’s easy to get focused on making money, but there are so many elements beyond the bucks that can kill a business. A study of startups by Fractl suggests only two of the top ten reasons why businesses fail are directly related to finances. The other eight reasons? All strategy.
My goal is to help your business become more strategically sound so that you can make more money and make your business sustainable. I walk all of my clients through my Three P’s:
People.
There are two types of “people” problems that failing businesses tend to have. First, businesses have problems understanding customers and investors. Entrepreneurs often have amazing ideas, but don’t fully develop why customers and potential investors should be excited about their business.
Second, businesses often miss some of the knowledge, skills, and abilities they may need on their team. All though great minds do think alike, functional executive teams need diverse backgrounds, proficiencies, and opinions to make a business successful.
Planning.
Adios, former life of the verbose, thirty page business plan with fifty pages of appendices. Randy Williams of Talley and Twine suggests most people get so stuck in the details they fail to follow through. Anthony Tjan surveyed entrepreneurs and found that 70% of the businesses that had a successful exit did NOT start with a traditional business plan. Today’s businesses revolve around business canvases, pitch decks, and more compact business correspondence to give people the highlights, and the details upon request.
Performance.
Finally, we should also understand how to measure success. Sometimes we are overconfident, or not confident enough about our numbers; sometimes we have too much, or not enough data; and many times, we just don’t understand the cause and effect relationship between our strategy and outcomes. I am a strong believer that businesses should find ways to test their innovations out quickly, measure success, and pivot when needed.
Startup Founder Steve Hogan suggests that running out of cash is the most obvious symptom of a greater problem. I hope we can work together to resolve any strategic opportunities before running dry is a reality for your business.
Comments