Survival Of The Fittest: How To Overcome Common Startup Problems

FORBES Publication

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Creating a company that is not only going to survive but thrive is difficult. However, with a certain combination of elements, strong willpower and the right information, you can create a business that will stand the test of time.

Lack of funding is one of the biggest issues that new companies face, but other issues include product-market fit, not properly defining a custom problem and HR/people problems between founders and team members.

As a startup founder, I’d like to dive into each of these problems and lay out how startup founders can mitigate these issues to help ensure their companies survive and thrive.

Product-Market Fit

To start a successful business, you must offer a product or service that is sellable and that fits into a market, either niche or mainstream. You can have a product or a service that is fantastic and that you have spent years thinking up and developing, but without a proper market, it will be extremely difficult to secure investors who share your vision.

Consider this: 42% of businesses failed because there was no market need for them, according to 2014 CB Insights data. So, here are some key ways to determine whether or not you have product-market fit.

• Talk to your target audience via customer surveys to determine if there’s a need for your product or service.

• Make sure that the value proposition you’re proposing will address the current and future needs of your customers.

• Look for investors who not only want to sell your product but also invest in its development.

Defining A Custom Problem

Unless your product solves one specific problem, it will be difficult to justify why an investor should throw their hard-earned money into your idea. Your product needs to serve a purpose and, again, be sellable in order for investors to see that it has potential.

Investors need to know that you’ve considered not only the viability of your product, but also ways your product could evolve. Ask yourself what assumptions you’re making and whether you’ve validated your assumptions.

• Have you proven that your audience needs it?

• Have you explored (or considered) other ideas?

• Have you mitigated risks to ensure product success and return on investment?

People Problems

Yet another issue you may face involves your co-founder(s). Often, when one founder comes up with an idea and the other wants to go a different way, you may have trouble coming to a consensus about what you to do with the company.

• Write out all your ideas related to the topic in question on a whiteboard and determine the areas where you agree.

• If disagreements escalate, consider bringing in a consultant to facilitate open and honest discussion with your co-founder and perhaps your leadership team as well.

According to the same CB Insights data, 23% of companies failed due to having the wrong team. It is always best to take the time to get on the same page and to try to find a common goal and direction for the company.

• Remember, you’re a team.

• Create an environment where every person’s opinion is valued and appreciated.

• Set aside the time in your busy schedules for team meetings.

• Make effective communication a cornerstone of your company’s culture.

Lack Of Funding

Lack of funding is one of the hardest things for a company to overcome and many simply do not find the investors they need in order to thrive, let alone survive. Thousands of aspiring companies offer similar products. It is your job as a founder to make sure your company is the one that stands out. You must capture the eye, and the pocketbook, of the right investor to help your company succeed.

The key is to collect the proper metrics:

• Revenue generation

• What affects revenue generation

• Features that will drive growth and revenue generation

The goal is to improve the perceived value of your company to heighten its appeal to investors. Finding investors is the next step, which is easier if you know where to look.

• Contact companies that you admire and ask for advice. You may get a better response than if you come right out and ask for money.

• Develop relationships at networking events, conferences and more; you just might find an investor who is interested in your company and eager to invest.

Taking the time to create a strong base is the fastest way to get sound investors and make sure that your company will stand the test of time.

How To Hire For Your Deficiencies In The Early Stages

Forbes Publication

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Hiring for your deficiencies is one of those “it depends” questions.

Who you hire first depends on your team’s current deficiencies, and your deficiencies are defined by what you are trying to accomplish. If you’re a typical startup creating a software product (apps, website, etc.), there are typically a few standard roles and capabilities you’re going to need to fill: product, sales and engineering. These are not the only capabilities and roles you’ll need to fill to make a company work, but they’re capabilities that are 100% necessary.

Who you need to hire depends on what you can do. You already have one or more founders. What can those founders do? While you’re searching for product market fit, do you need sales? Maybe that’s covered by one or more founders, for now. Maybe it’s not, and you are at a point where you need to build and scale a sales team. Can one of your founders code or lead external engineers? Perhaps not, and you need to hire someone to do one or the other.

In general, the main things you should make sure your team can do are the three capabilities I listed, plus one:

1. Product

2. Sales

3. Engineering

4. Vision

Let’s dive into these four capabilities, and who will be responsible for each one:

Vision

Vision is what’s left over, and is almost always the main responsibility of the CEO. Vision is the mental understanding of what your business will be, as well as what it is now. It’s the understanding both of what you think the market will grow to and how you can take your business, as it is today and build it into what it will be tomorrow. Vision has ramifications in all three other areas. It’s what ties them all together and becomes your means of communicating a future view of the world with your employees and your customers.

Product

Product is the job of the person who takes vision and translates it into the different products and services your company provides. They maintain the mental image of what those products and services are now and how they can be modified in the future to help guide the company toward a realization of the vision. A good product person will have the ability to inform engineering on how they should build product, and they should do so in a way that asks for metrics to be collected on the functionality created. Product teams should use these metrics to provide feedback to vision, which will guide which product direction should be continued in the future.

Engineering

Engineering is the technical implementation of products. To build them well, you need to hire quality people who have the capability to implement the products and services you want to create. This means someone on the team has to have the ability to either create quality engineering outputs or to judge them and guide others to create them. This is either a CTO, VP of engineering, lead engineer or manager in the case that they are not technical but can lead.

Sales

Sales is a different animal than the above, but it’s arguably more important. A sales organization is both a sole means for achieving revenue for a company, as well as a feedback mechanism for product and engineering. A good sales lead will have the ability to set up an organization so that it is driven by incentives and judged by concrete metrics. Sales organizations are almost always internally competitive.

So, you’ll need to figure out what capabilities you need and how each person involved is differentiated. You’ll also need to figure out how to distribute equity amongst them. Are they essential to running the business? Perhaps they’re essential enough that you consider them a founder.

If not, think of what percentage of ownership feels motivating but is larger than what a future standard employee will get. An engineer on your already built-out team will likely get one-tenth of one percent of the employee equity pool. A good rule of thumb for equity is to give between that and what you give to yourself — somewhere in that range is what your first hires should get.

Five Things To Look For When Considering Working With A Vendor

Forbes Publication

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As an entrepreneur and business owner, you work with vendors on a nearly daily basis. While you certainly will be regularly courted by a series of new vendors, knowing whether it makes sense to start a partnership with one of them or not requires some careful consideration.

Before you decide, you first need to figure out whether this is someone you can work with long term. Can they provide you what you need in a way that will be agreeable to your values or will you grimace every time they come into your establishment?

To find out more, we asked five members of YEC Next to discuss some of the important things to look for when deciding whether or not you want to work with a vendor. Here’s what they said:

Members share a few things to consider when debating establishing a relationship with a vendor.

Members share a few things to consider when debating establishing a relationship with a vendor. Photos courtesy of the individual members

1. Integrity

Integrity is the most important quality to look for when considering working with a vendor. Look for a proven track record of following through on commitments. Many companies are good at sales and telling you what you want to hear, but do not deliver. Ask for a list of the vendor’s past and current clients and contact them to get an objective viewpoint about the vendor. – Kyle Wiggins, Keteka

2. Alignment Of Core Values

As entrepreneurs, we’re driven for quick growth and value, and sometimes forget that we’ll have to frequently work with these vendors. To make things stress-free, make sure that your company’s core values and ethics align with those of the vendors. Without alignment, aggravation can set in, and even the most successful of relationships from a monetary perspective can feel draining and invaluable. – Ron Lieback, ContentMender

3. Strong Communication

Something to consider is how frequent, quick to respond, clear and kind the communication is. Does the vendor communicate honestly? Have they been clear about what is being offered and what costs should be expected throughout the sales process? What is their timeline to deliver services? We partner with vendors that respond within 24 hours and show us they value working together. – Jessica Baker, Aligned Signs

4. Clarity

I want to know exactly what I am paying for. It makes me cringe when I start working with a vendor and all of a sudden, they say something is not included in what I purchased. Whether it be a service or product, I like to list out clearly what I am expecting from a particular transaction. I don’t move forward until I get written confirmation from the vendor that all my requirements will be met. – Ajmal Saleem, Suprex Learning

5. Alignment Of Goals

You should never enter into business with a vendor who doesn’t understand the value of your product or service. They should understand exactly what you want to achieve in the market, and should be able to articulate why they’re suited to make that goal a reality. Likewise, get to know their business goals and track record with similar businesses. Make sure you see eye to eye with one another. – Bryan Driscoll, Think Big Marketing, LLC

Will a New Hire Work Out? 6 Signs to Watch For

Recruiter Publication

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Today’s Question: After 90 days, you should have a good idea whether a new employee will work out. What is the top trait you look for in new hires when evaluating whether to keep them on board? Why is that trait particularly important?

The answers below are provided by members of YEC Next, an invitation-only community for the world’s most promising early-stage entrepreneurs.


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1. Passion and Motivation

Passion is about believing in your idea. Passion creates a drive to persevere when you are tired, commitment when things look bleak, and conviction to make an idea a reality. Motivation is key to us. We want to know what motivates employees. That way, I can get to know their aspirations better and understand what they are bringing to the business.

Jessica Baker, Aligned Signs

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2. A Proactive Nature

Is this person doing the minimum to get by, or are they doing their job and then one thing above that? It’s the people who are proactive who help you get your business to the next level. You can see this in their words. Do they actually care and ask questions that go deeper than simply doing a task?

Jim Huffman, Growthhit

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3. Commitment to the Mission

We’re a small startup, so it’s incredibly important that every core member of our team is completely committed to the mission, vision, and values of our company. We’ve seen that this level of commitment can determine whether or not someone is willing to stay late or work on the weekend in order to complete a necessary task or solve a crucial problem. Beyond ability, complete buy-in is crucial.

Kyle Wiggins, Keteka

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4. Having ‘GWC’

I’d have to use ideas from How to Be a Great Boss by Gino Wickman. There really have to be three things, not one. They have to “GWC”: Get it, want it, and have capacity. They need to understand the job they have to do, they have to want to do it, and they need the mental/physical capacity to do it. If any of those three are missing after the first 90 days, they are likely not the one for the job.

Ryan Meghdies, Tastic Marketing, Inc.

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5. Impressing Others

The top trait I look for is if this person continues to impress others with their behavior. Good people will continue to impress you by going the extra mile, reminding you of top priorities, and getting things done faster and better than you expected. If the new employee is simply getting things done at expectation, that’s likely not good enough.

James Hu, Jobscan

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6. Attitude and Aptitude

It all comes down to attitude and aptitude, two traits that are paramount for a successful workforce. The attitude speaks for itself; no client or customer wants to deal with a disgruntled person, and neither do coworkers. As for aptitude, the ones constantly pushing themselves to learn new areas of your business are the ones who will help you scale quicker and smoother.

Ron Lieback, ContentMender