May 5, 2020
How to Keep Your Company from Failing – Missing a Long Term Vision
Startups are a risky proposition. Even if you have your dream team in place, plenty of time, and more money that you need, you can still have a spectacular failure on your hands. I have had numerous sleepless nights trying to come up with ways to make payroll for certain startups, and others where everything just seemed to fall into place seamlessly and became wildly successful. This is the first of a series of posts listing the main reasons I’ve experienced as to why startups fail and how you can address them before they cause an issue for you.
Missing a Long Term Vision or Exit Strategy
Without a vision and a plan to get there, your startup will have a lot of issues staying focused. At one point, a web consulting company I founded in Chicago, had challenges getting sales after 9/11. Previously, we’d been creating web sites for a lot of law firms. Now they were asking us if we could do eDiscovery (computer forensics). Since the sales weren’t there for designing web sites anymore, we needed to pivot in order to keep the company going. Since the initial vision was no longer the focus, I cashed out since I was not interested in working in computer forensics. The five year plan I’d created was no longer the path the company would follow.
Regardless of whether you’re a product or service company, you will need a vision that can enable you to create a road map with milestones on how to achieve that vision. At a staffing firm, the vision was to have 25,000 employees on retainer by 2025. No one had done the math on that when I joined the company, but with our existing employee base and its organization, we would have to increase employees by 40% year-on-year to achieve that number. We decided that it was unrealistic to expect those results through our traditional business model, so we started to test new business models that could get us closer. In addition, we changed the vision to be the largest recruitment outsourcing company in the world by 2025. We developed a new road map, opened new markets, added new services, created new business models and they have grown significantly since the new vision was created.
Vision can also used to inspire employees. If they believe it, feel part of it, and understand the road map to getting there, they will become more productive, innovative and stay longer with your company.
When it comes to customers, they may not need to know or understand your vision unless it can be leveraged to become more interested in your value proposition and where your startup plans to go in the next few years. For customers who require very long sales cycles, for example, regulatory or government approvals, it may be critical for them to know what your future plans are in order to seal the deal.
It’s also easier to convince investors and partners, and attract top talent if you can express where you plan to take the company. They all want to see where you see the company going, revenue generation strategy and your exit strategy in order to evaluate whether your company has a long term plan as a sustainable business.
Planning this vision can take a while. Sit with like-minded people – ideally people you may want to work with at a later date – and decide where you’re going to go and whether that vision can be the start of a roadmap your people can follow, milestones that can be achieved, and ultimately build that sustainable business.