Most Common Mistakes Growing Startups Make


Guest post by James Burbank, editor in chief at BizzMarkBlog

Trying to put all of the growing startups in a single bag is probably a big mistake since startups grow in size, workload and revenue for all kinds of reasons and under all kinds of circumstances. Still, the mistakes these growing startups make tend to make are so very similar that one feels there is definitely some logic to seeing them all as one relatively homogenous group.

These mistakes need to be identified and talked about as often as possible, hopefully helping startup owners recognize the various potential hazardous paths before they make too many steps on them.

Not Introducing Structure

For the most part, startups tend to be somewhat chaotic entities whose inception is often quite improvised and which can survive the early days without having too much structure. When a startup consists of a few close people, they do not need clearly defined procedures for every little thing. It develops in an organic way and even if there are problems, they are identified quickly and can be solved without too much backtracking.

Once the startup starts to grow, this is no longer true. Once you have half a dozen more people working on ten times as many processes, lack of structure turns into the worst kind of chaos – destructive and time-consuming. There is too much going on at any given time and there are too many people involved.

Informal communication can only handle so much.

Every growing startup needs to adopt some structure and set up standard procedures for all kinds of tasks, from the smallest to the biggest. It may feel to some people as if their beloved startup is going corporate, but the basic human and business truths dictate that structure is crucial for any growing startup's success.

Changing Too Much of Too Little

Running a successful startup is all about balance. The mere fact that startups are mostly lean companies means that they have to do quite a bit of balancing to simply stay alive. Once a startup is 'out of the woods', its founders and/or management have to do perhaps the most difficult balancing act.

Namely, a growing startup simply cannot remain that same company that it was in its earliest days. Its customer base is growing, its product is evolving, its financial situation is entirely different. Sticking to what had worked in the past would be the safest way to ruin, the only variable which aspect of it would fail first.

On the other hand, startups that decide to change too much are also risking a lot. For example, a startup that makes too significant modifications to its product risks seeing its most loyal customers leave. An irresponsible handing out of equity can cause early holders to start rethinking their position which can lead to a whole slew of various problems.

In essence, a startup needs to understand its changing realities, move with them, but still remember what it is that makes it unique and what has put it in a situation where it is growing.

Making Personnel Mistakes

Depending on what a startup is about and how it is making money, its personnel needs will differ more or less from other startups. Often times, these are tiny differences that one could easily oversee. For instance, one startup that develops machine learning software might need an extra coder or two while another startup that develops machine learning software might actually be in need of a tester.

One of those startups might also need someone on the business side of things, handling stuff like cash flow issues while the other might need an HR person more since their employees are leaving at an alarming rate.

Things only get more complex once you start factoring in the experience, the skillsets and everything else that usually goes into the hiring process. Add to this the need for senior management and adjunct departments and you got yourself a personnel minefield that you cannot tread carefully enough.

That does not mean you shouldn't try. You should always try. Read up on it. Perhaps even hire an outside advisor or a company to handle your personnel needs.

Closing Word

A growing startup is more fragile than it seems. Sure, it has survived the growing pains, but the next step is just as sensitive.

Remember what your startup is about, instil structure to it and be smart about who you bring on.

It should be enough to prevent catastrophes.

 

 

 


Comments (1)

  1. Booboone says:

    Not having a financial mentor is also an important mistake. Sometimes things do go as planned, and failure seems to be near. When that happens people (CEO, secretary…) tend to panic. At this point an experienced mentor or advisor can make a big difference.

    Most successful CEOs have a mentor they can turn to during the ups and downs of a new company. This advisor needs enough experience to help them make tough decisions which can save the company from ruin.

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