One Thing Determines Business Success Or Failure More Than Any Other Share:
- Steve Williamson, Dir. Product Development, eRep, Inc.
- Monday, February 22, 2021
Tags: #leadership #hiring #entrepreneurship
There are many statistics that paint a grim picture for entrepreneurs. One of the most common is that 21.5% of small businesses fail within their first year of operation. There are many causes. Review this list of the top six reasons startups fail from CBInsights  and see if you can spot the underlying theme:
- No market need
- Ran out of cash
- Not the right team
- Got outcompeted
- Pricing/cost issues
- User unfriendly product
All of these reasons for business failure could be solved or avoided with a single, simple action that may surprise you: put the right people into the right seats.
Six Causes for Business Failure
Hiring Mary instead of Bob for the seat in accounting wouldn't change the fact that a failed startup created a product that had no market need. But having the right partner or brain trust during market research would have quickly revealed the reality of the market need and demand and averted an expensive disaster.
Running out of cash tells a story of poor planning. Relying on people who are hardwired to gather data with a mind for project management generates a reliable plan that can be followed to a successful outcome, without surprises.
Not the right team? This one is a no-brainer and if there was one single reason for businesses to fail, having the wrong team would be it. If you put a marketing-minded person in a position of product engineering and development, you end up with glamorous but empty promises and nothing to sell ? or at best you get missed deadline after missed deadline that make a loud but expensive whooshing sound as they fly by, with no actual revenue to show for it.
When the competition beats you to the punch, either because they were first to market or produced a product with more in-demand features, a failure to analyze market demand coupled with a failure to engineer a truly innovative product in a timely manner is apparent. Once again, having the right people in those critical seats would have avoided disaster.
Pricing and cost issues are similar to being outcompeted. Poor project management and innovation on the development side leads to cost overruns and missed revenue opportunities when products hit store shelves too late. Hiring people who know how to quantify and read the market gives you pinpoint pricing accuracy.
The stereotypes that engineers and software developers don't have good people skills doesn't always hold true in every individual working in those fields, of course, but it does speak to the need to let each expert focus on their area of expertise. Just because someone can design an efficient product doesn't mean they are adept at gleaning customer demand and reading market trends.
It Takes a Team
Smart business leaders know what they're good at and what they lack. They identify key functions and roles within the organization and surround themselves with people who excel in areas where their skills, experience and aptitude are lacking.
No single person in an organization can do it all. Success takes a team.
The challenges a business must face at startup are only exceeded in complexity and scope by the moving target and ever-changing risks faced by those already established but placid in their routine.
The famous quote, apocryphally ascribed to Albert Einstein, tells the story:
"Everyone is a genius, but one does not berate the fish for its inability to climb a tree."
Each challenge needs to be tackled by someone with the hardwiring best suited to the problem. You let the creative types find solutions to creative challenges. You let the logical types find solutions to obstacles involving hard data and engineering issues. Don't expect Mary in accounting to be your web developer and ease up on Bob in engineering if he struggles to create a marketing plan.
The Solution Is...
The underlying solution to avoiding every pitfall ready to doom a business into the dustbin is:
Put the right people into the right seats.
Every aspect of business risk can be overcome by accurately and honestly performing these three steps:
- Identify the problems to be solved
- Determine the human roles needed to solve them
- Hire the right people for those roles
If you surround yourself with those who are emotionally hardwired for their role and backed by the necessary education and experience, you can expect to meet or exceed customer expectations, beat the competition, and reach your strategic operational goals.
It all starts with the right hire.
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Innovator/Banker - Dir. Product Development, eRep, Inc.
Steve has a career in information technology, software development, and project management spanning three decades. He is the author of a series of fantasy novels called The Taesian Chronicles (ruckerworks.com), and when he isn't writing he enjoys cycling, motorcycle adventure touring, and buzzing around the skies in his home-built flight simulator.