Writing for Business Advice, James Oakes, director at ZEAL Investments, discusses his experiences of bouncing back from a struggling business and what fellow founders can learn from startup failure.
At 30, I launched an e-gaming business called Geonomics with my brother. It got off to a flying start: we secured investment from German lottery giant ZEAL Network; we worked incredibly hard, and we felt like we had struck entrepreneurial gold.
Unfortunately, our winning streak didn’t last. The reality is that 90% of startups fail – and ours was one of them. Yes, we had solid funding and a disruptive product, but we got stuck in our B2B sales funnel and lost sight of our real end-users. Failure was discouraging, but it also gave us an opportunity to learn from our mistakes.
Thanks to my experience – as well as recent successes in my latest role with ZEAL, sitting on the other side of the table – I know that entrepreneurial success does not depend solely on how much investment you have. Funding is critical, but it’s how you manage it and where you spend it that matters most. There are a wide variety of factors at play that need your attention – your product, your staff, your end users – and so it’s important to maintain focus.
When it comes to getting a business off the ground, there will always be problems and false-starts. The trick is knowing how to turn them into opportunities.
Don’t let personal pressures drag you down
Starting a business is a financial gamble. Say goodbye to your regular salary and prepare yourself for an unpredictable future with no guaranteed income.
If you have a family and employees, their wellbeing rests on your shoulders too. It’s a huge responsibility that claims an enormous amount of your time and energy – and if not managed carefully, it can derail your focus.
Each personality type responds to periods of extreme pressure in a different way, but consistent stress can ultimately break you. It’s crucial that you understand what your weaknesses and trigger points are and put supportive measures in place so that you have a firm bedrock when the going gets tough.
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Stay positive – but don’t kid yourself
Entrepreneurs are idealists. You have to dream big and have complete faith in your product – otherwise you wouldn’t be doing what you’re doing. That said, utterly blind faith is inadvisable. As much as you need to believe in your business, you also need to be honest with what is and isn’t working.
As soon as your start-up has moved from idea to entity, your job changes from dreamer-in-chief to business manager. Don’t forget the basics and always keep an eye on cashflow. The foundation of your business is your financial health. So get your head around your finances as quickly as possible and plan your budgets carefully.
Hire the right people
In the beginning, it’s tempting to either hire people left right and centre or attempt to do everything for yourself – neither will stand your business in good stead.
Patience is key to growing your team in the right way. Take your time to figure out your business needs and look for people who will help you meet your objectives. A good employee can take your company to the next level, a bad hire can set you back significantly.
It’s worth remembering that who you hire can influence your funding chances. It makes sense; your choice of employees is an indication of your business acumen – or lack thereof. What’s more, the people who work with you influence the character of your business. When an investor is assessing a start-up, they pay attention to the company’s energy, and if they get a bad vibe, they’ll move on.
Know your customers
Whatever sector you’re in, don’t lose sight of your customers. When sales are high and investors are happy, it’s really easy to forget about your end-users. But as soon as you do, your business will start spluttering to an early demise.
Geonomics was an unfortunate example of that lack of foresight. We sold our product to businesses for them to use with their customers. While the businesses may have fallen in love with our product, their customers, our real end-users, didn’t. Without them, we had no business – it was that simple.
After our largest, and last, funding round, we should have taken a good hard look at our business and highlighted any problem areas. Your customers will keep you on track, so keep them – and their needs – front and centre at all times.
To be a successful entrepreneur means focusing on what really matters – your end users and your finances – and not getting discouraged by failure. Your mission is to build a product that people love and use. If you get that right, success is yours for the taking.
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