Author: Neil Griffin, Innovation Director
We have all heard the stats that 80% of Startups fail, and that is normally over a 1–5-year period.
Some of this can be down to the idea, the market fit or lack thereof, and or even timing.
But for me, there are 5 really big reasons it happens, and these areas need to be paid special attention to for not just a Start-up but for any Business to scale up, grow and be successful.
I also think there is a priority order to them, and I’ll show you what I mean below.
There is a lack of quality Leadership in the business. Wow at number one I hear you cry. Absolutely fundamental to running a thriving business is the ability to Self-Lead (how can you run a business if you aren’t in a good place yourself) and also inspire others to achieve and hit goals. It is the main area businesses overlook as they prioritise other things but it underpins all the decisions that follow as the business grows and even the remainder of this list 😉.
The business doesn’t pay enough attention to Profit and above all Cashflow. Cash in whatever form is still king and if you can’t pay your bills, staff and make no money then unfortunately you don’t have a business you have a hobby!
I like to see a monthly cash flow statement as well as a P&L no matter the size of the company, the age-old saying of ‘you can’t manage what you can’t measure’ applies here.
And if you don’t want to do it yourself hire an accountant, they will save you enough tax breaks so that their cost is netted off.
Lastly, businesses in trouble bury their heads in the sand when things get tough with cash so always ask for help to find a solution, you have to Take Action!
If you don’t have a Plan how can you know where you are going and what decisions you need to make?
It doesn’t need to be war and peace, it can be fag packet details but at least it is something to show how you intend to scale up.
Given the nature of business, there is also little point in having that 5-year plan and only a 3-year one if you are looking for loans, grants and significant investment. Instead, work one year at a time and look per quarter. This allows you to react tactically to trends but still stay on a strategic route.
I like the Business Model Canvas as a template as it is simple, visual and impactful and if anyone needs a copy then let me know.
EGO & Pride are powerful things and when emotions are high this is a real blocker when it comes to change. That resistance to change can kill a business that doesn’t innovate and adapt when it needs to as it grows.
It mainly happens when founders and leaders are working in the business and not on it. As they don’t get their heads ups they don’t see the bigger picture and the impact of their attitude, behaviours and decisions.
As a business gets bigger the Processes within it have to change. This involves doing things differently (linked to point 4), leaning up the ways things are done and also trying to automate as much as possible to free people up to focus on the next stage of growth.
The goal is to still keep it simple but make it work for the size of the business you are now in by being consistent and efficient.
To grow yourself and your business these 5 areas are vital for growth. It is also worth surrounding yourself with likeminded people but also having a diversity in the workplace or environment you are in.
Here at The Innovation Centre Knowledge Gateway and Oxford Innovation Space we love coaching and mentoring growing businesses to help them scale up and have some great tools to be able to do that.