6 Secrets to Startup Success

The purpose of this book is to dramatically improve your odds of entrepreneurial success and enjoyment whether you aim to build a thousand-person venture or a solo consulting practice. It springs from my quest to understand what differentiates successful ventures from the large percentage of start-ups that disappoint. In 2007, I set aside my work with large corporate clients to UN introduction xiii American Management Association • www.amanet.org dertake a study of entrepreneurial success factors and work exclusively with early-stage companies, in which I took an ownership stake. I had solid experience to draw upon, having launched a successful consulting business, helped a favourite client turn a blank sheet of paper into a $100 million company, and worked to improve the performance of scores of management teams and a thousand executives over two decades. As I closely studied the entrepreneurial process, I came to understand that the “secrets” of start-up success are not so secret, and not difficult to grasp. The fundamentals that distinguish healthy ventures—principles such as understand your market, know your numbers, get adequate funding, stay flexible, and manage by fact rather than assumption—are well understood by shopkeepers all over the world. But for some reason, many entrepreneurs overlook one or more of these fundamentals, severely undercutting their odds of success. So I turned to a deeper set of questions: Why do so many entrepreneurs fail to take care of the basics? Why do extremely smart people rush to risk everything on untested business ideas? Why do so many founders underestimate their money needs, adopt pie-in-the[1]sky sales projections, or miss early signs that things are off track? Most ventures are driven by passion and belief. Most fail. Taken together, these statements are hard to reconcile, until we consider the possibility that entrepreneurial passion and start up failure are somehow tightly linked. Could the legendary commitment that drives and energizes so many entrepreneurs be the very thing that leads many of them astray? The more closely I observed the early challenges and choices of would-be business owners, the more clearly I understood how passion plays a powerful and central role in venture success and failure. Drive, determination, fire, belief, optimism, courage, confidence, commitment, certainty, and faith—these are the forces that animate a new business xiv 6 SECRETS TO STARTUP SUCCESS American Management Association • www.amanet.org ness and fuel and sustain entrepreneurs through the ups and downs of the new venture pathway. Each of these qualities, however, when magnified or misdirected, can lead to unhealthy business behaviours— to rose-coloured forecasts, to unwise commitments, to inflexibility in the face of new data, or to a catastrophically bad fit between a founder’s skill set and the needs of the new business. It doesn’t have to be this way. The good news is that you, as a founder, do not have to choose between passion and reason. You can do what you love and put the full force of your commitment behind your idea, while successfully navigating well-known start up challenges and minimizing inherent risks. This book is designed to help you do just that.