Sometimes those failures are market-driven. A great new competitor beats you to the punch. The economy tanks and you run out of cash. Meteors take out your corporate headquarters.
However, many failures are self-inflicted. I’ve been lucky enough to be an entrepreneur for a while and I’ve also hung out with a ton of great (and not great) entrepreneurs. I’ve seen businesses thrive and I’ve seen others fail.
I’ve noticed a few things along the way that can cause entrepreneurs to fail. I’ve tried to neatly bundle them up into what I affectionately refer to as the seven deadly sins of entrepreneurship. If you want to succeed in building your new venture, I strongly suggest you avoid these sins at all cost.
Over-consumption can kill you. Just because you have the funding you need (now) it doesn’t mean you need to go buy all sorts of crap so your offices can be hip and cool. It also means you shouldn’t go out and buy up a ton of people (via hiring) unless you’re equally prepared to fire a similar number of people when your cash can’t keep up with your appetite. Know your burn rate and keep it to a minimum. Buying stuff just because you have cash will burn your business down to the ground.
Greed sucks. I’ve seen it WAY too many times where an entrepreneur (founder) owns 100% of the business and greedily hoards every last share rather than using that equity to build a solid initial team. To be clear – that entrepreneur owns 100% of squat. I know of many situations where a founder imploded their business before it even got launched because they got greedy before the business was even built. Share (that’s why they’re called SHARES people!). Use early equity as a tool for bringing on the right people because if you’re stingy and greedy, you’re not going to find anyone to work with you.
If you’re serious about being an entrepreneur, you’d better learn the meaning of hustle. No, I’m not talking about the dance from the 70’s (do do do do doo do do do doo, do do do dooo doo do do do dooo – good luck getting that out of your head…). If you’re not out there hustling 148% of the time, you’re probably going to fail. There’s always too much to do and not enough time. If you’re going to “take it easy” for a little while during the growth (or even running) of your business, be prepared to take it easy for the majority of your time when the business fails and you have nothing to do.
People will piss you off along the way. An investor may spurn you. A prospect might buy from your competitor instead. A customer might dump you. In that angry moment, there’s always the temptation (and now with social media – the ability) to lash out at that person as a moron, clown, idiot, etc. If you let that anger fly, you’re toast. Why? Because people talk. Investors share stories. If you piss off one investor, the likelihood that others will want to give you money decreases exponentially. Check that rage or you’re going to get it back in spades.
You see other entrepreneurs do amazing things. Get funding, land customers, exit at ridiculous multiples. Many of us want those same things. The nasty part about envy is the belief that not only do you want what someone else has but you also believe they should be deprived of it or that they don’t deserve it in the first place. Resist the urge to say “Those guys are morons! How did they get funded/bought/etc.?!?! They’re idiots!” Instead, I encourage you to drop them a congratulatory note on their success. If you’re always running around bad-mouthing others who are successful, you begin building a lousy personal brand. Karma is always watching you…
“We’re so awesomely unique that we don’t have any competition and no one can replicate what we’ve built in 7 months because it will take them 700 years to catch up to us.” Yeah. You’re all that and a bag of donuts. You’re awesome. We get it. But don’t let yourself believe it (let alone broadcast it). Why not? Because it will damage your credibility (with customers, investors, etc.) and it gives your competitors added motivation to kick your ass. Swallow hard, go heads-down and let your results speak for themselves.
There you go – seven deadly sins that will destroy your entrepreneurial venture. I’m not saying that if you avoid these that you’ll be the next Google – but I am saying that if you *don’t* avoid them you’ll be the next failed business everyone is laughing about.
I’ve shared plenty of other thoughts on entrepreneurship here on the blog. I encourage you to read those as well if you are currently an entrepreneur or are considering becoming one. Hopefully those lessons learned and shared will help you be as successful as you can possibly be.