Wednesday, February 27, 2019

There Are Two Ways You Can Kill a Startup: Too Little Business and Too Much Business.

A couple of years ago, our five month old custom cabinet business, New Beginnings Custom Woodworks, was featured on our local news station. In our exuberance, we signed up too many customers with an unrealistic view of how quickly we could complete jobs. In less than a month, we had upset customers and significant cash flow problems as we made mistakes in our rush to complete jobs while also missing deadlines.

For any new venture, I believe there are three top factors that protect a business from failure:
  • A good fit between the product/ service and the market it serves.
  • A complete understanding of the company's cash flow position with daily projections.
  • Marketing, marketing, marketing!
In the case of our cabinet business misstep, we were able to recover our financial footing through the three key factors. Our product ultimately was a good fit with customer demand, so after apologizing and then completing jobs satisfactorily, we were able to refine our product to even better serve our customers. We simplified our business by specializing in only shaker style cabinets, speeding up our production time and allowing us to more strategically market to our customers. Finally, our grasp of our cash flow position enabled us to raise funds in time (through God’s abundant blessing) to make it through our mistake and onto the future. 

I shared this story a few years ago for an article in The BAM Review.  It's a good survey of common business as mission mistakes for people leading new ventures.

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