Lessons from my Entrepreneurial Journey #3
“Wrong decision”. “Wish we had taken more time to decide on this”. “Few months on the wrong path. “We need to start all over again”. “How could we not see this coming?”
Failures, wrong decisions, mistakes. They happen despite the best efforts, a great team, advisers and having everything in place. Some of them are tactical and can be corrected. The others are strategic and could be disastrous.
The timeless truth of startups are, there will be
- Mistakes (Minimal Impact)
- Wrong Decisions (Moderate Impact)
- Strategic Blunders (Major Impact)
What is needed is a framework for quick detection of this and a course corrective action. I have listed all the 3 separately as each of them are different w.r.t. impact on time, cost and startup survival itself. Time being the most important one, better to jump in early to fix it (You are lucky if it turns to be a false negative) rather than hoping things get better and being caught on the wrong foot.
Mistakes usually tend to take following forms :
- Hiring mistake: When you have made a wrong hire, how long do you wait to undo this. A 30 day is a good time to get a feel of the new hire adaptability. If you feel things are not moving in the right direction, good to have an open conversation to reiterate the expectations and work towards heading in right direction or set a plan for separation if expectations do not match. Perhaps the person does not fit the role expectation needed for a startup. Force fitting never works.
- Wrong Customer: This customer is dragging along for long, with promises to pay up after some milestone which keeps changing. Heart of hearts you know, it’s taking your startup in the wrong direction. You have invested time, effort in building this.
Put a deadline. Clearly communicate the efforts you have put in to build the business relationship, value created and results achieved for the customer and what you expect, else exit. If the customer does not respect the value you have added, it’s not worth having this customer.
2. Wrong Decisions:
- Wrong partnership: You are wooed with some synergistic partnership. You find it going nowhere despite multiple meetings, time and effort spent. 90 days is a good time to assess the progress of a business relationship. Get out of the partnership. You will find some other better partner if your value proposition is strong.
- Wrong agreements: In all the agreements that you sign, ensure there is an exit clause, when things do not work out, or one side fails to live up-to the partnership expectations. Verbal agreements are dangerous.
- Wrong Investor: You and your investor do not see eye to eye on macro level issues. (Primarily vision of the Co, Strategy). Better separate to preserve the relationship rather than hanging hoping things will get better.
3. Strategic Blunders:
- Wrong Market: You are in a market that has no potential or is not living up to its promise it showed early on scaling.
- Wrong Core Competency: The market that you got in has fundamentally different core competency needs to succeed than what your startup has or what you thought was needed. Nothing wrong here. Exit it as soon as you know this. Its better spending time, effort and money on something else worthwhile, lessening your loss of investment & time as quickly as possible.
- Too Fast Expansion: Expanding to additional lines of business too early, hoping to get a first mover advantage. If the fundamentals are not in place (Domain understanding, Bandwidth, Leadership Team, Execution ability), it slowly kills the other business as well.
Results, Results, Results: Be Objective. Always benchmark against the results expected with timelines for decision making or course corrective actions or exits. Do not delude yourself that things will get better.
This is the third part of a series by the author. Find the previous post here.
[About the Author: Shashi Bhushan is the Founder & CEO of HealthMacro Technologies. He plunged into entrepreneurship to explore his dream of building something that touches people’s lives. HealthMacro were TiE’s Anthah Prerana 2013 winners. He can be followed on twitter at @ShashiBhushanHR]