Successful Startups: The Important Qualities That Will Get You to Year Five
We’ve discussed at length in the past the fact that most startups will fail in their first year. Those who are lucky enough to celebrate their first birthday are far from out of the woods – years three and four tend to be just as precarious.
At year five, however, something pretty extraordinary happens.
If your startup is able to cross that hugely important threshold and celebrate its fifth anniversary, your changes of long-term success increase exponentially each year. If you really stop to think about it, this makes perfect sense.
By year five you’ve likely already made most of the major mistakes you were destined to make in the first place. You’ve learned many valuable lessons – usually “the hard way” – and you’ve come out a much stronger entrepreneur for it. You’ve taken time to gather data about your audience, about your product and about the problem in your customer’s lives that you’re trying to solve and your ongoing strategy is more stable and sound than ever.
Based on this, it stands to reason that your major goal from the outset shouldn’t be “I want to create the type of company that will last for the rest of my life.” It should simply be “I want to make it to year five.” If you can accomplish that, the much loftier first goal will essentially take care of itself.
Understand the Battle You’re Fighting
As you fight tooth-and-nail to get to year five with your startup, one of the most important things you can do is understand both what you SHOULD be worrying about and what you only THINK you should be worrying about. Case in point: many first-time entrepreneurs are very worried about things like neglect and fraud.
To a degree, this is understandable. Entrepreneurs (especially young ones) are very idealistic, after all. You might be very worried about someone embezzling huge amounts of money from your company without realizing it, thus causing you to close your doors.
You may have a deeply-rooted fear that your idea for a product or service is SO PERFECT that someone will steal it out from under you, beating you to market and ending your dream. You may be petrified of putting someone in charge who doesn’t know what they’re doing, sending your company down the drain due to neglect.
Statistically speaking, these are things that almost never happen. It’s true – one study puts neglect, fraud AND disaster as the root cause of just 1% of all startup failures. Based on this, any second that you spend worrying about any of these things is a second that you’ve essentially wasted.
We’re not saying that if you want to get to year five with your company you shouldn’t worry. Instead, it’s a matter of spending the precious minutes of your day worrying about the right things.
Competency
The simple fact of the matter is that an incredible 46% of all startups will fail due to incompetence. But remember, the term “incompetence” isn’t nearly as harrowing as it sounds. In business terms, it just means that you “lack an ability to do something successfully.” When you start to break down all the signs and symptoms of business incompetence, they’re a lot more common than you might think.
Business competency means that you’re not pricing your product or service based on emotion – you’re making the right call based on accurate, actionable information about your market. You’re not living a lifestyle that is too expensive for the business you’re trying to run, draining your funds along with it.
Competency means that you’re paying your business taxes on time. You’re planning properly for both short-term gains and long-term objectives. You’re keeping the right records and you’re managing your finances properly – or, if you don’t know how to do either of those things, you’re finding someone that you trust who does.
These are all very straightforward parts of running a business that, yes, likely have very little to do with why you wanted to create a startup in the first place. But that doesn’t make them less important. Any one of these issues could prove to be a major stumbling block in year two, three or four. If you’re able to mitigate them, congratulations: you’ve got an essential quality that a shocking amount of people seem to lack.
Your Passion is Infectious
Perhaps the most important quality that will get your startup to year five isn’t just an unbridled passion, but a talent for making people just as excited as you are. When you choose to create a stunning presentation or Infographic with a tool like Visme, you don’t JUST do it because statistics tell you visual marketing is essential these days.
You do it because your passion dictates you must. You do it because words alone aren’t the best way to communicate with your audience why your product or service is going to change their lives. You do it because it’s the most efficient way to SHOW people what you’re trying to do and why that matters.
A blog post with a spec sheet is technically enough to get the job done, if your only goal is to tell people what your product can do. But for you, that was never going to be enough. You always needed a way to show people why you care so much in a way that words alone would never allow, which is why putting together that new presentation is the highlight of your day.
The Long, Hard Path to Year Five: “Bring It On”
There are two types of entrepreneurs in this world. The first is the person who has a great idea for a product or service, begins to build the company they’ve always dreamed of, sees statistics that point to the catastrophic failure rate of startups and pauses. They think to themselves “oh, wow. This is going to be harder than I thought. Is this a good idea? Are these traps that I’m going to fall into? Am I wasting my time?”
The second type of person sees the common causes of most startup failures and thinks “terrific! Now that I know so much about the common mistakes that people seem to make, it will be easier than ever for me to avoid them!”
Call the second type of person whatever you want – from “naive” to “woefully optimistic” to “passionately diluted.” One thing you’ll also have to call them is a “successful entrepreneur,” because that unbridled positivity even in the face of the challenging road ahead is one of the most important qualities you’ll need to help get your startup to year five, year ten and beyond.
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