It has never been a better time to be an entrepreneur and launch a start up. With coverage across the media of the latest tech success, shows like The Apprentice and Dragon’s Den showcasing hopefuls and accelerators opening across Tech City in London. In fact, even the rebranding of the Old Street Roundabout in London as few years ago as Tech City shows how this new career and business path is being established alongside the traditional corporate career. I myself, have started a tech startup called Stratability with the mission to build a platform focused on helping individuals and businesses to accelerate capabilities.
But as hopefuls clamber to be part of the Tech Hub, chase Angel investment and VC funding and push their new business through the lean start up model or the business model canvas with an eye on influencers such as Ryan Holmes and Joel Gascoigne, there is plenty of evidence that entrepreneurship isn’t necessarily a golden path to success.
According to Bloomberg 8 out of 10 businesses fail within their first 5 years. This statistic gets worst for tech startups with 9 out of 10 fail in their first 120 days. Whew – Stratability has made it past that so hopefully we are ok to keep going down this long journey.
There is an increasing bottleneck of funding when seeded companies try to find Series A funding and whilst this can play out well for savvy investors, for entrepreneurs it often means scaling back or seeing their company fail.
So what are some of the common reasons that start ups fail? It isn’t just enough to have an idea anymore; the gap you think you see in the market may in fact not even exist. In order to build a successful proposition you need to objectively assess whether your idea is truly disruptive and differentiating. You also need to shape your business and team so that it has a chance of success on its strategy journey.
Mission, Vision and Goals
Entrepreneurship can seem like a direct path to success but you mustn’t lose focus on why you are in business and the values of the business that you are building. Without a clear statement of mission, vision, goals and objectives you won’t be able to motivate people and culture, let alone your customers. Your offer might have been created by you but it needs to be able to grow beyond that. You need to have a stated mission and vision, goals and objectives that people who work alongside you can strive to achieve with you. In today’s world, its about building followers who want to work with you, or buy from you, and that is what having a killer mission and vision will do for your business. I still get goose bumps whenever I read Steve Job’s original mission statement for Apple:
“To make a contribution to the world by making tools for the mind that advance humankind.
Your core offering
Focus can often be on the product or service that you have created and not on whether this is something that your potential customers want or need. Who is your market? Is your product or service viable? A lack of understanding and testing or prototyping of the business model can often lead to failure. Costs are very important here. It can be difficult to step away and assess your idea at a fundamental level in an objective way but without a differentiated and defined product or service your business will struggle. Another key mistake here can be focusing on product design rather than solving a customer problem.
Shaping for success through THE STRATEGY JOURNEY
Like all businesses, Startups too are on THE STRATEGY JOURNEY®. They are just more than likely stuck in the first 2 phases which I have described above trying to get their products right and out to the market and fighting to stay true to their mission and vision. They don’t have resources and planning to move to the later phases where the operating model and transformation is taking place. Many are struggling to nail down their business model and make sales with customer to validate it. Trust me, I know what that feels like with Stratability. I am an engineer and an architect at heart and I’ve come to realised that I’m not particularly good at sales and marketing so I’ve had to bit the bullet and hire someone on very tight personal funding. Its very hard to spend your hard earned savings on someone else in the early stages of a business, especially for newbies who aren’t use to this way of thinking.
Business Shaping is often overlooked in the rush to get a product or service to market or take advantage of seed funding that is being offered. There must be multiple phases in every project. A new business is a big project.
Lack of resources, including the right people with the right capabilities, money to finance projects and growth, and the intelligent use of data and technology all play a part in the day-to-day of most startups. Understanding the ecosystem that your startup plays in is also vital to understand who your competitors are as well as who can act as partners to help your business success. Partnerships are vital to the success of startups in offering additional resources, supplies along the entire value chain and value network. Partners often work for free, while not quite, but the way they get rewarded or paid is different as there is no upfront payment. Many work on the basis of revenue splits or they are able to access the database of the startup to share the list of customers. Often partners eventually become investors too.
There’s no getting around that fact that all businesses, startups included, have to traverse the 5 stages of THE STRATEGY JOURNEY to succeed. The 5 models of THE STRATEGY JOURNEY framework, can help a startup to shape itself and form a foundation for success. By taking the time, often as little as 2 days to shape the business, you can ensure that you are bringing the right product to the right market with the right team and deal with whatever the start up world wants to throw at you.
For a startup, the key is to get through the 5 stages as quickly as possible and take lots of small little journeys to create lots of smaller wins to keep itself going, learn and pivot and start again. The bigger the journey, the bigger the failure.
In most of the workshops that I run on business shaping for startups and small businesses via Stratability, I ask the founder or founders to sign their completed workbooks at the end of the course to agree with themselves that they will execute their newly created game plan to traverse their strategy journeys. As well as having a newly shaped game plan, its all about mindset to create accountability. Hopefully the accountability symbolised by that signature is first step to the transformation of the startup into the next possible unicorn.
Note: An older version of this blog has been published on stratability.co as well as juliechoo.com. This blog has been updated to include new statistics, and with additional content to capture the importance of THE STRATEGY JOURNEY.
Julie Choo is lead author of THE STRATEGY JOURNEY book (Coming in June/July 2019) and the founder of STRATABILITY ACADEMY. She speaks regularly at numerous tech, careers and entrepreneur events globally. Julie continues to consult at large Fortune 500 companies, Global Banks and tech start-ups. As a lover of all things strategic, she is a keen Formula One fan who named her dog, Kimi (after Raikkonnen), and follows football – favourite club changes based on where she calls home.