Strategic Versus Operational Mistakes, Founders Dilemma.
A friend once crushed a business after signing an exclusivity deal with a supplier for her product to realise the supplier’s product was the worst you can have in the market. As a startup founder, you will make mistakes along the way. It is what makes startup companies interesting. Nobody knows what’s the future entails. You will always be in the process of trying to figure out what works and what doesn’t. The most important thing is understanding the difference between operational and strategic mistakes. The earlier you know this, the better.
Strategic mistakes are the ones which are extremely difficult to recover from; there is a better chance they will kill your business or push you out of it. One common strategic mistake is failing to identify the right founder to start a business with. It is a mistake that most startup founders tend to make. You can’t recover from a wrong cofounder without massive consequences for the company. Startup founders need to be very picky in selecting cofounders. To find someone who can keep his ego in check and share your vision is not a joke, but it is necessary. From the beginning, you have to make a decision of whether you want to be rich or king.
Other strategic mistakes of the founders include; burning cash, acting without planning, shareholding structures, getting into an industry they don’t understand, underestimating their proposed value and spending too much time on things that don’t affect their business. These are things you can get away with. They will kill you, now or later. The worst thing is most of the time, we don’t realise we are making these mistakes since they are not operational. We don’t discuss these things in team meetings. We are busy optimising the day-to-day operations. When we realise it is too little, too late.
An organised startup team always finds a way to address operational challenges. They will spend enough time tweaking things to see what works and doesn’t. Make no mistake; too many operational errors can also lead to catastrophic failures. Routine, poor engagement with the customers is the best way to kill your business. The goal of customer relationships is to ensure the customer comes back. It helps manage the cost of acquiring new customers and maintains the customer's lifetime value. Structured team reflection meetings and systems optimisation are the best ways to eliminate errors in delivering value to your customers. Spend time listening to their needs and optimising accordingly.
In the end, businesses don’t die because of bad ideas. There are several ways to pivot a lousy idea to something that works. You can’t “pivot” your cofounder or investors. You are stuck with them once you have made a decision for them to join your team. Make sure you make the right choices from the beginning. Figure out your business model very quickly while finding your product market fit. There is no money to burn.