The first 12 months of your business can determine the success or failure of it. The National Venture Capital Association estimates that 25% to 30% of venture-backed businesses fail. According to recent research by Shikhar Ghosh, a senior lecturer at Harvard Business School, if failure is defined as failing to see the projected return on investment—say, a specific revenue growth rate or date to break even on cash flow—then more than 95% of start-ups fail, based on Mr. Ghosh’s research.
In How Not To Die by Paul Graham, he wrote: “When startups die, the official cause of death is always either running out of money or a critical founder bailing. Often the two occur simultaneously. Distraction is fatal to startups. [D]on’t go to graduate school, and don’t start other projects.” Most startups fail in the first year of operation because of poor execution, poor leadership, starting a business on a “build it and they will come” concept without concrete facts to support your assumptions, bootstrapping without an actionable plan for growth when your run out of money. Some startups fall in the trap of loosing focus right from the beginning. Execution is more important than ideas, if and when you have to change your original idea, do that quickly and move on. If you are failing on your current concept, fail fast, learn your lesson fast and move on to something else.
Don’t let your startup become another victim of statistics. Most of these startup lessons were shared by entrepreneurs after their first year of operation.
- People (including VCs) are not out to steal your idea, so don’t be too defensive about it
- Focus, focus, focus. Don’t chase every good idea that comes along, focus on a core product or service and, iterate around it.
- Mistakes will be made so don’t beat yourself up over these but learn, adapt, move forward and persevere with your vision and those lessons learned.
- KISS — Keep It Simple, Stupid!(especially if you’re building a consumer-facing company)
- Iterate. Keep improving on team dynamics / the code / the business model / the user development strategy / the way the product gets communicated.
- Don’t spend too much time debating which technologies to use.
- Your first few employees will set the culture, so make sure it’s consistent with who you are, who you want to attract to your company.
- Cash is King, board control is Queen and equity is your castle
- Speed is more important than perfection
- It always takes longer, cost more and brings less
- Staying alive is the most important thing for a startup.
- Cash problems kill more young companies than all other causes put together.
- Things take longer than you expect. Plan 2-3 times longer than your estimates.
- You will need a huge dose of persistence.
- Listen and stay close to your customers.
- Do more faster.
- As the company grows, make sure that you are delegating to your employees
- Start with your minimum desirable product. Avoid the temptation to build more than you need to launch.
- Remember the odds are over 90% that you will fail. Plan to succeed, prepare to fail.
- Your product is never going to be “ready.” Get it out there, take your lumps, make it better.
- Board meeting should never be product strategy debates. Double true that for product tactics.
- Be patient. There’s no such thing as overnight success