The #1 Reason Why Startups Fail
Do you ever wonder why entrepreneurs like Richard Branson, Mark Cuban, or Elon Musk seem to just “get it right”?
You might think they have something special and are born with a “success” gene. Well, this is simply not true. They have systems and habits of approaching business and life, and it works for them. I’m not going to presume there is one rule that everyone should follow, but if I had to choose one, this would be it.
To paraphrase Scott Dinsmore’s thoughts on planning:
There’s only one real reason why the big-time successful people seem to get so many of the important things done – and still have time left over. It’s not because they were born with something special or only sleep three hours a night. Stop telling yourself they’re special, because they’re not. They simply have found a strategy that works. And they execute on it continuously.
PLAN. Plan the work and work the plan, and be spontaneous, innovative and outrageous in between. More on this in a moment. First, let me zoom the lens back to a 5,000-foot view so we can identify where entrepreneurs get stuck and lose their footing:
There is an internal conflict that happens when running a startup. As an entrepreneur, you’re an innovator, an improviser, and therefore great at creating breakthroughs. This happens in conditions where there are tight constraints; for example, very little time, money, or resources. Therefore, you get rewarded for being spontaneous, following inspiration, breaking away from the plan, or having no plan.
Then, there is a subtle transition that happens in a startup’s evolution and most people miss it. It happens after the product has been born and customers start to use it. The need to plan starts to become equal to or even supersedes the need to innovate. For example, once a startup finds a product-market fit, creating repeatable systems are vital for successfully scaling. However, some entrepreneurs get caught up in an unwillingness to evolve with the needs of the company. Cue the Marshall Goldsmith classic, ‘What Got You Here, Won’t Get You There.’
One of the number one reasons why startups fail is a founder’s unwillingness to plan. You may already have an idea or two about how to write a business plan, so this post is focused on doing it. As they say, it is not about common sense; it is about common practice.
Therefore, if you are inspired, I recommend you do one thing: add “planning” time to your weekly calendar. Whether it is writing your business plan, planning your week, planning an agenda for a meeting, or planning a vacation, this has to be totally congruent with your startup and your life. Be in the habit of looking ahead to the pivotal moments of your week, your year, and your life.
Taking it a step further, once you’ve done the work you planned – what’s next? Dr. W. Edwards Deming, often thought of as the father of modern quality control, developed PDCA (plan–do–check–act) as an iterative four-step management method for the control and continuous improvement of processes and products. “Check” refers to the importance of assessing your results, while “act” refers to the need to change how you act going forward. While the concept was developed in 1939 and popularized in the 1950s, and a lot has changed in those 60+ years, startups have kept starting up and either succeeding or failing ever since. Once you’ve done what you planned, be sure to check your results and reassess how you plan to act going forward.
In closing, recall, Jeff Weiner, CEO of Linkedin on why he schedules 30- to 90-minute blocks of “buffer time”:
There is no faster way to feel as though your day is not your own, and that you are no longer in control, than scheduling meetings back to back from the minute you arrive at the office until the moment you leave…
Thinking proactively and thinking strategically and starting to revise or refine your vision, your mission, your strategic objectives, that takes a lot of time. So that’s where a lot of my buffer time goes.
Open your calendar. Look for the last time you “planned.” Now think about why someone like Jeff Weiner, CEO of one of the world’s largest professional networking sites, would schedule planning time every week… look back at your calendar and schedule some planning time.