5 Business Mistakes that Ruin Tech Startups
If you aim to steer clear of the ruins of failed tech startups, avoid these 5 business mistakes that tech founders make over and over again.
Does your company have resource leaks? Are there areas in the company where money could be saved, or profit be improved? Is poor productivity causing issues with client or customer delivery, or increasing expenses?
How do you identify and resolve those issues?
If you are like many business owners, you started your company from the ground up and expanded your team to meet the needs of the company or the market. At the end of the day, the goal is to sell more stuff to more people or companies. While this is great, how it is being done could make the difference between being highly successful and struggling.
Only about 25% of businesses reach revenues north of $250k (you can check some other interesting stats here). You would think that a service-based company with that revenue would be doing pretty well. But inefficiencies and leaks in the company along with an ineffective pricing strategy caused the company and its leadership to struggle for many years.
Here are some of the things that we found during discovery:
Inefficient systems are those wherein the costs or steps to produce a result are higher than they need to be. Most importantly, there needs to be a way to track productivity to determine how efficient the systems are. In this company, we found:
Processes ensure that people do the same things the same way and also act as training and resources which employees will use to do their jobs. This company suffered from
This resulted in disorganization and inconsistency across the organization, sub-par client delivery, overtime requirements to get the work done, and lower morale.
Luis Almanza, Ingrid Ahumada and I discussed how “You can’t track what you don’t measure,” wherein businesses cannot improve performance if they don’t measure it. Business owners will make assumptions, but it is data that will provide the ultimate truth.
This company was not effectively tracking anything.
The company was hanging onto existence by a thread. It was so desperate that it held on to clients that were unprofitable, did not charge enough for their work, allowed team members to charge too much on projects, missed deadlines without accountability, and allowed business expenses to get out of control. Further, there was no definitive measure of progress.
When we think about hierarchy, we don’t always think about it in terms of efficiency from a bottom-up approach. But that view is extremely important. Because of this company’s ineffective hierarchy:
Here is an article called 7 Types of Organizational Charts that may be helpful in designing your company’s structure.
General disorganization: The disorganized organization is by far the most prevalent issue that I see with growing companies, especially as they experience rapid growth.
While there was a plethora of issues, those below stand out as ones that impaired the company:
While no company sets out to be inefficient nor wants to have resource links, if a company does not plan for it, there are going to be resource leaks which will cost the company time, money, and productivity. It can also result in a poorer company culture, lower profits, and poor customer experiences.
Establishing systems, processes and procedures, and measuring performance should be done very early in the business evolution and simply be part of the company culture. It should certainly be planned for as the company looks at opportunities to grow. (Take a look at our article “Designing BizOps to Support Rapid Growth”.) Otherwise, companies will be even less likely to reach operating income levels north of $250k.
Aepiphanni is a Business Consultancy that provides Advisory, Management Consulting and Managed Services to business leaders and entrepreneurs seeking to improve or expand operations. We are the trusted advisor to those seeking forward-thinking operational and strategic solutions to help them plan for and navigate through the challenges of business growth. Learn more about us at https://aepiphanni.com or register for a complimentary discovery session at http://coffeeandaconsult.com.
If you aim to steer clear of the ruins of failed tech startups, avoid these 5 business mistakes that tech founders make over and over again.
In this day and age, it’s a no-brainer that companies must adopt some type of technology. The challenge often lies in how they are embracing that technology and whether they can extract the maximum ROI out of it.
Strategies to support rapid business growth, from flexible resource allocation to global expansion tactics. Business leaders must design operations for resilience despite inevitable shifts.
"*" indicates required fields