The Entrepreneur Insiders network is an online community where leading experts and influential figures in US entrepreneurship contribute insights and answer pressing questions about business and careers. Today's question, “How do you move your company forward after a serious downturn?”, will be answered by Deb Streeter, a professor of small business and individual enterprise management at Cornell’s S.C. Johnso School of Businessn.
For young entrepreneurs, one of the biggest shocks of starting a business is discovering how lonely leadership is. Consider a startup conceived and launched in an incubator or university accelerator program: the founder receives funding from family, friends, angel investors or even venture capitalists and begins building the business. Before long, the founder finds themselves far lonelier than expected. At university, your idea easily receives respect and attention from other students, teachers and experts, but developing it in the market feels like a solo performance. The founder must remain steadfast and undaunted despite exhausting, difficult realities. The first years of developing a business idea demand many hard decisions with very little help. After each stage of development, the founder must be ready to face more worries about finances, people and even personal emotions.
As a startup goes through the ups and downs of early development, its owner realizes the responsibility of maintaining the team's morale rests on their shoulders. Even in the company's worst moments, when the leader is losing faith in themselves, the most important thing is to maintain a positive face for the business. So who can founders rely on when they are emotionally overwhelmed? Certainly not co-founders or other management team members, who expect leadership and stability from the company's head. Nor can it be their spouse, who will worry about personal interests and family life and ask the owner to prioritize the same values. More distant family members are not suitable either, as they may also have invested in the company. Founders cannot share their emotional conflicts with investors or advisers, because these people have invested time and money in them and expect steadiness and inspiration.
Some of the most successful founders I have known have found a few trusted advisers. These people are not involved in the business but invest heavily in the founder as an individual, treating the business's activities as a secondary priority. Some young founders think they will need this kind of emotional support, but in my experience, loneliness in entrepreneurship is inevitable.
Startup advice often emphasizes cash flow, and rightly so: without good cash-flow control, a business struggles to survive despite economic success. For example, your sales team may sign a major contract, but if the company lacks funds for raw materials and manufacturers, the contract will fail. For startups in new markets, leadership may also struggle to determine when profits will shift from slow growth to rapid expansion. Founders must calculate carefully to ensure sufficient financial strength for that transition while maintaining operations as it approaches. In short, cash flow is important for new companies
Even so, raising capital and managing cash well do not equate to success, as many people still believe. The truth is that money is not the only deciding factor. In most cases, people play an important role in a startup's success or failure. Here are some people-related factors that can determine whether a startup succeeds or fails:
- Founder: Leaders' personalities and abilities.
- Investor: Capabilities and the connection between investors and the startup team.
- Personnel: talent and diversity of personality.
- Suppliers and Buyers: Relationships with the heads of these organizations.
A lack of connection between any of the units listed above can affect a company. Startup teams resemble marriages in that their breakup rate is around 50%. This means managing business relationships wisely is just as important as managing finances. If your company has cash flow management problems, you can find many suitable people to resolve them, but if people management fails, no amount of financial strength can save it.
Chương trình liên quan tại YUP Education: X-Startup – khóa học khởi nghiệp «Khởi Chánh Nghiệp» · The Journey – lộ trình phát triển doanh nhân
