5 Existing Business Warning Signs That Can Lead To Failure

Most business founders start their company with the highest of ideals and wouldn’t dream of building one with a culture of apathy or downright unethical behavior.? Yet all too many succumb to the pressures of survival, driven by demanding investors or a cutthroat competitive environment. How does an owner recognize the warning signs, let alone know what to do about them?

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Some key insights on this issue are provided for corporate environments in the classic book by David Gebler, “The 3 Power Values: How Commitment, Integrity, and Transparency Clear the Roadblocks to Performance.” I‘m convinced that the underlying points are even more relevant to new business founders, with some adaptation for the realities of the startup world:

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1.???? A switch to survival mode. When customers don’t appear as fast as the founder projected, and cash runs short, everyone on the team starts to worry about losing their job.? Suddenly “closing the sale,” no matter what is required, takes precedence over the grand team vision of changing the world.

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When a new business team is in survival mode, they need straight talk from leaders they respect and trust.? Founders are often tempted to sugarcoat information.? If you want employees to stay engaged, tell them the truth, with specifics on what is required to turn things around, and the team will surprise you with their commitment.

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2.???? Big bad investor interference. Investors provide funding, but they also have their own set of expectations on how things should get done, with aggressive milestones. For the team in the trenches, these pressures can cause tensions to run high, and commitment to high level goals is lost. The culture changes to satisfy the investors at any cost.

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Make your investors part of the visible team at the startup, and make sure all key milestones are well understood up front.? Then make sure you communicate regularly to your investors, so they don’t get surprised. Investors are people too, and with regular communication, will trust people to do their job, without sacrificing integrity and ethics.

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3.???? Misunderstood pivots. ?Virtually every new business has to make real-time changes to their product, plan, or market, as they learn from initial customer interactions.? Without proper communication to the team, these changes look like random shifts in direction, which negate the efforts of team members, and raise a cloud of fear and indifference.

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Business founders must resist the urge to withdraw and isolate themselves as they deal with the pressures of changes to their original plan.? Instead, they need to be more transparent, and spend more time listening to the team as well as communicating the value of a pivot.

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4.???? Troubling talk around the water cooler.? In every organization, large or small, there are people who become disillusioned or negative about the current direction or progress, usually due to personal problems.? Negative people and messages are a virus that can kill your culture, and cause others to turn a blind eye to the real priorities of the business.

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Leaders need to pick up these negative messages quickly by listening and really engaging with their team, and then dealing with them with integrity.? Non-productive complainers need to be moved off the team quickly, or everyone reverts to that level.

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5.???? Lack of communication from the top.? With today’s 24/7 flood of information and social media, the team expects to be constantly updated on what’s going on at the top. When they see the information they need is missing, outdated, or flat-out misrepresented, frustration is inevitable, and this will eat away at your culture.

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Make sure your team knows how decisions are being made, as well as what they are.? Be transparent, set goals, and then tell internal and external stakeholders where you are in meeting those goals.? Invite employees to join in and contribute to this process.

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Thus commitment, integrity, and transparency are the catalysts that every team expects from their leaders to maintain a healthy culture, strong values, and superior results.? When a good business starts to experience slippage on any of these catalysts, the team can cascade rapidly into disengagement, rationalization, and self-deception.

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Have you checked the signs in your organizations lately?

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*** First published on Inc.com on 07-13-2024 ***