Find a Viable Business Model
- Assuming the customer problem is known and well understood.
- Most potential customers are not willing to pay you to solve their problem your way.
- Failing to stop and regroup when customers do not respond to your business model as anticipated.
- Focusing on a market too small to support the business long term.
- Lacking flexibility and managing the business as a smaller version of a big company.
- Lacking metrics to evaluate whether the business model is worth scaling into a company.
- Hemorrhaging cash because sales and marketing were scaled prematurely.
- Hiring people that lack the skills needed in a startup.
- Focusing exclusively on product development before finding a market.
- Lacking clarity about how the company will become profitable.
- Lacking a clear, crisp, singular focus.
- Suffering from poor financial management and major cash-flow problems.
- Lack of urgency because the startup is overfunded.
- Underestimating the amount of resources needed to find a viable business model.
- Hiring too many people too soon.
- Reduced flexibility by prematurely adding systems, processes, and controls.
- Focus on org charts, titles, and stylish offices.
- Believing that one or two large marquee customers is a profitable, sustainable market and business model.
Create Customers & Drive Sales
- The CEO – consumed with operational tasks that somebody else should be handling – can no longer do everything alone.
- Everyone is constantly fighting fires instead of anticipating and solving problems.
- Sales are stagnant.
- Job responsibilities are not rationally structured so quick delegation of tasks is not possible.
- There are few written procedures, making training new employees a time-consuming and ineffective process.
- The company lacks direction as priorities constantly shift because an “idea-of-the-day” management style dominates.
- The company is not able to grow beyond the individual capacity of its leader.
- The increasing workload is becoming unmanageable as people struggle to keep up with an ever-growing set of priorities.
- There are no financial or key operating metrics to measure progress and determine if the company is on track.
- The CEO refuses to let go of absolute control of the organization and delegate some responsibilities and authority.
- Not enough cash or financial resources available, resources are stretched too thin, and basic operational systems are overwhelmed.
- Scaling too quickly, hiring too many people too soon, and building an infrastructure beyond what is necessary to meet the needs of this stage.
- Becoming involved in businesses that are unrelated to the core business. Focus is much too broad.
- Weak coordination, poor communication, duplication of efforts, and last minute heroics.
- Continued success turns confidence into overconfidence or even arrogance.
- Infrastructure is a patchwork of systems and processes created in response to problems as they arise.
- Personal interests of the founder(s) overshadow organizational needs.
- A major crisis occurs: major customers are lost, key employees leave, a strategic alliance goes sour, a new product launch fails, debt engulfs the business – the crisis can take many forms, but it brings the business to its knees.
Scale the Company
- Growing need for true experts because big knowledge gaps exist in key functional areas.
- Some people, particularly top team members, are not capable of handling their growing responsibilities.
- A sudden increase in employee turnover and retention.
- The business is increasingly making mistakes and errors.
- Customer complaints are rising.
- No planning process or a written strategic plan for growing the company.
- The company is growing faster than the organization’s capabilities and infrastructure can support.
- People can’t agree on issues, leading to internal conflict.
- The business is highly dependent on the founder(s) or a small group of individuals for success.
- The business is limited by the capabilities of its leaders.
- The management team still comes to the CEO for every important decision.
- It is difficult to make and implement effective decisions.
- The company has become too big for one person to control.
- Hiring and other people “mistakes” are made.
- Lack of communication, poor coordination, and confusion permeate the organization.
- The company is growing in sales while profits remain flat or fall.
- The organization becomes internally focused and loses touch with developments in the market.
- Functional departments move in different directions; silos, politics and even infighting prevail.
- It has become almost impossible to get things done because the company lacks the necessary structure and process.
- Products are becoming obsolete, new products do not meet customer needs, and competition has intensified.
- The organization does not have the right people in the right positions, and the senior management team is weak and ineffective.
- There are not enough effective managers.
- Investors or the board are becoming impatient with the company’s performance.
- Some people lack the skills to keep pace with growing responsibilities.
- Leadership that is not fully engaged in the day-to-day management of the business.
- There’s an us versus them mentality throughout the organization. Everything old conflicts with everything new.
- One or more members of senior management do not support the organizational and operational changes.
- Continually moving back and forth between Stage 2 and Stage 3.
Become a Market Leader
- Sales are slowing in some or all products.
- A gap exists between the desired rate of future growth and the growth rate that the existing business can deliver.
- There is major resistance to change within the organization.
- Industry, market, and technological changes are happening faster than the company can keep up with them.
- Problems have become more complex and existing solutions no longer work.
- The CEO is spending too much time on operational issues and not enough on strategic issues.
- An acquisition or IPO is being considered, but there are serious questions about the organization’s ability to handle it.
- The company is waiting until existing markets and products stall or decline before finding new markets and new products.
- The organization is unable to execute the desired strategy.
- There’s a loss of entrepreneurial activity and the organization is over-managed and over-systematized.
- People don’t understand where the company is going.
- The management team isn’t strong enough to lead the business into the future.
- Key people are leaving or thinking about leaving the company.
- Accepting the status quo, as managers rely on what worked in the past to take them into the future. Management takes an “if it ain’t broke’ don’t fix it” approach.
- Overemphasizing ROI at the expense of innovation.
- The organization has lost its ability to self-diagnose its problems.
- Candid conversations, initiative, and innovation have been replaced with conformity, uniformity, and a fear of making mistakes.
- The business lacks the managerial depth to run and grow its businesses.
- The only source of new growth is through acquisitions.
- There is a lack of urgency and the company is slow to understand and respond to changing market conditions.
- An aura of invincibility permeates the business. Entitlement and/or arrogance plagues one or more of the executive team. Senior managers become insulated in a clubby environment where titles and glad-handing matter more than competence.
- Underinvesting in new growth initiatives, while overinvesting in mature products or businesses.
- Getting things done is increasingly difficult.