Dramatically Improve The Odds of Startup Success
Thinking of starting a business? Your passion can work as a driving force or it can work against you. Here’s how you can channel your enthusiasm towards making your new business a success.
What differentiates successful business ventures from the large percentage of startups—more than half—that fail? After conducting extensive research on the subject, I have concluded that the answer depends on a double-edged quality: passion. The following principles will help enthusiastic entrepreneurs squeeze the most out of their passion, while not being trapped by it:
1. Ready yourself as a founder.
Too often, passionate entrepreneurs leap head first into a venture before thinking it through. To improve your readiness to succeed as a startup founder, take an honest look at yourself as a founder before leaping. The first step is: Clarify your reasons and your goals. Why are you doing this? What do you hope to achieve? The second critical step is: Understand your entrepreneurial personality. What makes you tick? From there, focus on ways to leverage your skills, assets, resources, and relationships.
2. Attach to the market, not your idea.
Passion is an inner phenomenon, but all healthy businesses are rooted outside the founder, in the marketplace. To turn your passion into profits, emphasize the market—always think about your business relative to the customers you serve; know your markets—strive to understand the needs and preferences of your core customers; and execute on your market opportunity by placing a priority on your customer’s experience and perception of value.
3. Ensure that your passion adds up.
Passionate entrepreneurs tend to develop rose-colored plans, over-estimating early sales and underestimating costs. To convert your passion into tangible business value, emphasize the importance of planning plus math. Write a business plan that makes financial sense for the current needs and future goals of your startup. Construct a compelling math story, covering how the elements of your business will come together in a way that is profitable over time. Address the crucial issue of funding: how much is required and from what sources.
4. Execute with focused flexibility.
No amount of startup planning can accurately predict the unexpected twists and turns imposed by reality. To succeed, a new venture needs both iteration and agility. Establish an ongoing process for translating ideas into actions and results, followed by evaluation. Test and adapt your concept as early as possible. Work on continually improving the fit between your big idea and the marketplace.
5. Cultivate integrity of communication.
Passionate commitment to an idea can breed reality distortion. That is, aspiring entrepreneurs often see only what they want to see and rely on “feeling good” about their venture as their only measure of success. To avoid these dangers, commit to truth-telling and welcome healthy debate, even tough conversation, from the start of your startup. Commit to building the skills essential for high-integrity communication: curiosity, humility, candor, and scrutiny.
6. Build stamina and staying power.
Contributing factors aside, most startups fail because they run out of money or time. To lengthen and strengthen your venture’s runway, aim to launch close to the customer (ideally with paying customers already in hand) and raise more money than you’ll think you need. Focus on building personal staying power. Healthy entrepreneurial stamina is not just about the refusal to quit, but is grounded in ongoing learning and improvement.
In summary, the most successful entrepreneurs have learned how to bring the very best of their passion without being blinded or limited by it. If you are launching the next big idea, or thinking about it, you can dramatically improve your odds of success by (1) preparing yourself, (2) grounding your business idea in market reality, (2) paying close attention to the financial health of your venture, (4) staying flexible to new data and learning, (5) celebrating all news, both “good” and “bad,” and (6) continually looking for ways to stay in the game until you win it.