Fail Fast - Common start-up story

It is one thing to be a thinker coming up with excellent fresh ideas all the time, and quite another to be an executor with the capability to turn rough sketches into reality. The focus for start-ups is scaling up - getting from 0 to 20 and in the tech world success needs to be international and in several markets, not one.

But getting past the many roadblocks does not guarantee a clear path ahead. Many companies hit more roadblocks further on with unexpected failure looming. 

 Grow Fast - Fail Rapidly: A common start-up story

 You’ve just started a company. You have excellent business propositions and there is definitely a gap in the market for your product. You managed to attract a decent amount of investments and you decide it is time to introduce your baby on a global stage. Sales have been great. You receive more and more orders from all around the world. You are excited to see things finally comes to life. But suddenly everything’s taking the turn for the worst: constantly failing to hit deadline and delivery terms, complaints from customers start to flood in, your employee are under massive stress and despite their commitment to work over time, there’s still too much work waiting for them to solve. You are upset, everyone is upset. Where have you wrong?

 This is a very common story for start-up and SMEs whose rapid expansion backfires. With growth comes complexity. Decisions can no longer be quickly made on gut instinct, but more strategic analysis and evaluation is required. As customers, relationship, markets grow exponentially, so do operation challenges and the potential for collapse of the company’s ability to sustain healthy cash flow. Unless you are either able to put a pause on growth or successfully develop the management capability needed, your business is very likely to succumb.  

Here are my 4 tips on how to better manage and continue to grow your business - create your future,  in times like this:

1. Create  leadership capability

Times like this is when Kiwi entrepreneurs needs to realise the difference between being a founder/owner and being an CEO and whether to step up or to seek external management capability.  Either create leadership capability from the start or strengthen/sharpen up leadership asap.

It is often the case for business owner to be extremely knowledgeable and passionate about the firm's business concept and product offering. Such in-depth understanding is particularly beneficial and important in the early stage of the business - when the primary focus was on R&D and investment pitching. However, as business matures and complexity is added, being technical competent and passionate alone does not necessarily craft a wise leader. It is now more about having the strategic mindset and knowing when and how to delegate responsibility to get things done most effectively and efficiently.

It is also very important to know when to ask for help. Many entrepreneurs feel threatened and insecure when involving others in high-order strategic trajectory of the business.  For a business that in development-stage, regardless of industry, undercall the management capacity needed to build at very high rates of growth can be a fatal mistake.  If you feel you tick this box by consulting with your board it will not be enough.  The board work on several projects not just yours. Llook to your staff and work with mentors.

2.  Establish a clear vision and direction

It is important to have a vision statement in place. This will helps employees understand what the business is about and where their efforts should be going into.  Great companies have great vision that leaders promote and repeat at every opportunity.  Try not to underplay your advantage.

Being strategic also means eliminating unprofitable projects and making painful but necessary cut. The business needs to be specific enough so that it won’t be spreading its resources too thin while at the same time, be agile enough response to emerging opportunities.

 3.  Set up KPIs to measures performance

Many believe that KPIs are more suited for big players, not for small businesses with the team of less than 10, who can comfortably run the show without much formal target-setting. While this notion might be true when the company still in its infancy stage, by the time it reaches it growth-phases, KPIs are imperative. Without looking at numbers, we are essentially shooting in the dark.

KPIs are  important as they help indicate business health and determine the course of action needed to advance the company’s position in the market  . Establishing a KPI dashboard that specify priority will inform everyone in the organisation about the broad picture of where the business is heading, thus allow them to hone in on areas that count most. Moreover, a record of organisation’s performance compared against targets is a reliable source of intelligence that is extremely beneficial in future planning, identification of competitive advantages, and finance.

 4.  Partnership and Collaboration

 The biggest challenge for SMEs is scalability. Being small, though offers business agility, often times, also means significant restricted pool of resource. While resource-related problems are not something we can fully fix within days, teaming up with other business can give us the push we need to compete against the loaded resource-rich firms. SMEs will not only benefit from the joined pool of resources, but also be given the opportunity to leverage off the brand awareness and reputation of their partners. This will in turn grant them access to a much wider audience and market, and hopefully a constant stream of sales and profit.  

 5.  Local Support

Kiwis are independent as nature, but we need to know when to ask for helps and supports. Here a short list of organisations and business incubators that small companies should have a word with before venturing overseas. You might’ve be surprised by the amount of wisdom and values you’ll have out of these conversations:

• NZTE
• KEA
• Creative HQ
• Grow Wellington
• Icehouse