As a founder you’ve just started your business with excitement and optimism about your chances of building a successful business, and why wouldn’t you be excited and optimistic? After all, you have always wanted to follow your vision, and you probably have already bought into the prescribed advice from your “gurus” such as Tony Robbins, with mantras like “you can do it”, “follow your dreams, and passion” and “aim for the stars” etc. These gurus will most likely already be offering you some sort of formula of “follow my advice and you too will be successful”, and because you are wanting to hang on to the coattails of their success you start following their advice, verbatim. Many of these gurus are selling a precept with the illusion of success After all it worked for them, so why wouldn’t it work for you?
As you begin your entrepreneurial journey, the paradoxes of entrepreneurship begin to set in; namely, you have to lose money to make money, and, you have to work long hours to give you freedom. Paradoxes indeed, but nonetheless, true, at least initially you think.
As your business turns from infancy to adolescence, your “startup honeymoon” phase also ends and so does your enthusiasm and joy, which now quickly fade as you have reached, what we call, the “Struggle Zone”. This is a place where you have no money, no time, and lots of stress leading to burnout, (and over the long-term even leading to depression or anxiety (or both)). The sad thing is: over 70% of entrepreneurs and business owners remain there for an extended period of time, (as illustrated below). This can sometimes even last for years, as entrepreneurs work to figure it out. Then naturally, doubt sets in, and the new mantra now becomes, “what am I doing wrong?”, as the voices in your head turn to, “this is not what I have up signed for”, or is it?
The “Entrepreneur’s Journey” has now become a nightmare. Those entrepreneurs that are able to “cross the chasm” of the Struggle Zone (as it’s euphemistically known), to reach the “Lifestyle Business” zone (the part where you can enjoy the business lifestyle you’ve aimed for), eventually learn to let go. Michael Gerber in his book the E-Myth (Revisited) clearly describes the process of “letting go”, and if entrepreneurs cannot learn to let go, they either remain in adolescence and eventually fail, through a slow death, or they revert to infancy again, doing everything themselves and becoming the lone-wolf solopreneur by creating a job for themselves. The choice is yours.
Here are the main reasons why you may be stuck in the “Struggle” zone and some strategies to help you fix these problems:
- No product/market fit: The entrepreneur has created a product or service that nobody needs because it is not unique and valuable. This is simply because they lacked proper customer insights into their needs and wants. The entrepreneur has not understood the customer’s problem well enough and in the process, they have created a solution that the customer doesn’t care about.
- You MUST fall in love with the customer’s problem NOT the solution or the idea or technology.
- Insufficient capital: The entrepreneur has not invested sufficient capital into the business, so they begin to do most of the tasks themself, (most times averagely, sometimes badly). This is a sure recipe for disaster as the business is undercapitalised.
- You must either learn to hustle for sales, and focus on the lowest hanging fruit with the best cashflow opportunity, or get a part-time job such as consulting, to recapitalise the business.
- Too much “cash-burn” in the business: The entrepreneur may have invested a large amount of capital into the business, but they have underestimated the realities of a startup or overestimated their capabilities, such as the time to cashflow, which will always take much longer than anticipated and/or their startup costs are much higher than anticipated, and/or they don’t understand the costs to acquire a customer.
- This is where having an experienced startup mentor or coach can really make a difference.
- Insufficient Cashflow: The business may not be generating enough cash flow to pay its’ suppliers, employees, taxes, etc. on time, potentially leading it to trade insolvently. This may be due to the operator’s mismanagement, partly because of overextending trading terms or continually discounting, etc. There may be various reasons why, but it can be helped.
- To improve your cash flow, there are various things to do. The first thing is to get a bookkeeper, who can help you with the business’s trading terms, its’ debtors, and creditors, prepare proper cash flow projections, and keep an eye on your expenses. After all, it is the lifeline of the business, so this is very important to b able to control.
- Insufficient profit margin: The business may have an insufficient profit margin which is the fuel required for business growth. Surprisingly, most business growth in Australia (60%) comes from the business’s retained earnings (not investment, which most of us are led to believe).
- You must increase your prices and/or decrease costs and STOP discounting (which is killing you).
- Spend too much time doing the wrong things: Businesses often spend 80% of their time doing the wrong things in their business and 20% of their time doing the right things, when it should be the other way around, leading to poor execution, results, and time management. An example of this is social media; although it can be very important, it can also lead to a lot of waste of time leading to very little short-term results.
- You must learn to separate important from urgent and outsource tasks that take up too much of your time or are important but not urgent, such as your social media and bookkeeping (for example). This is where your network and building your team become important. Then focus on urgent tasks, such as cashflow generation.
- Business not scalable: The entrepreneur has not created a business but a job for him/herself (i.e., self-employment), where they are trading time for money. Thus, they have very little chance of growing it, (let alone selling it). They have done very little to use technology to create processes to automate, and also, they have done very little to continually build their network to help create trusted teams to help outsource tasks wherever possible;
- You must continually invest time to build your network and build your team
- No sales system: The entrepreneur has built a business that is too reliant on marketing (through channels such as social media) and enough emphasis on sales.
- You must create a sales system that provides a consistent lead-generation process to fill your sales pipeline of prospects. You must create a process of continually following up on leads and closing sales.
- Poor customer relationship management: Many businesses suffer from “customer churn” by not knowing how to engage or look after their existing customers to turn them into advocates for the business. It costs about 8 times more to get a new customer than it does to keep an existing customer.
- You must figure out how to turn its customers into raving fans of the business. To begin with, it you must have an effective CRM system and strategies to learn to keep customers, coming back, buying more, and advocating their network. A good business coach can help you with this.
- No partnerships or alliances: Alliances and joint venture partnerships are the lifelines of business growth, because they can provide leverage to a business that it can’t achieve on its own. But, remember, there must be a two-way benefit for these alliances and partnerships to succeed. This could come in the form of affiliate or introduction fees or commissions. They can also help entrepreneurs exploit new opportunities that arise through collaboration, but they require mutual vested interests through trusted relationships which take time to develop (sometimes years).
- As these take time to develop, you must start building your network before you even begin your business.
- Lack of personal growth: The business owner is unable to transform from an entrepreneur to an entrepreneurial leader, which makes good business decision-making and thus growth very challenging. Some entrepreneurs become stuck in their old ways because they don’t have the insights, perspective, and self-awareness necessary to keep evolving. Many are also remained clouded by their cognitive biases.
- There are two great ways to overcome this: 1) keep reading books on personal development (recommended one book a month); 2) take on the services of a business coach and/or mentor who can challenge you and give you different perspectives.
So, if you are feeling like you have been within the Struggle Zone for a while, then it might be time to revisit what you are doing and re-think what you need to do to change course. Having a great network can help you, as they could fire questions and ideas at you and also play the devil’s advocate. But ultimately, you must have the courage to change what you are doing. As Einstein said, “the definition of madness is doing the same thing over and over again and expecting a different result”. So, reach out to your colleagues or a business mentor or coach to help you get a different perspective from others that have done it.