Ambition and realism instead of greed - prerequisites for success not only for startups
In an interview published on the fundraising platform Leapfunder, I summarized the most important lessons from decades of consulting and management work in restructurings and with startups. The three most important - no matter if startup or established company - are from my experience:
- "Don't be greedy - be ambitious when it comes to your business, but also be realistic when it comes to financial expectations.
- Respect openness and fairness - honesty is the best way to succeed in business
- Build a team - Your business depends a lot on the type of team you build. Make sure it's a good team."
Obvious self-evident facts, you'd think. And yet, time and again, even after a brief look at a company being consulted, one or more of these basic tenets is observed to be violated. Again and again, the realistic view of opportunities and risks falls victim to whitewashing, e.g. resistance in the company organization proves to be underestimated or the speed of market penetration of a new product is assessed as too optimistic. Alternative scenarios for overcoming such obstacles often do not exist in financially evaluated form and alternative organizational and process models.
A regular self-critical look at the performance of the management teams is also often missing. Nearly every executive will have experienced it: The weaknesses in the team can be named by almost all team members in a confidential conversation; only, there is a lack of open dealing with it and the necessary consequences for the team composition. Necessary, sometimes even tough leadership is not perceived.
Startups often need the next rounds of financing after the founding phase. These will only succeed if investors are not only convinced of the market opportunities of the startup, but are also certain of a high-performance organization with clever processes and established adherence to the principles mentioned at the beginning.
Even then, startups often face funding hurdles. Pre-seed financing is not that hard to get, there are enough angel investors willing to invest. In Germany and Europe, we should focus on solving the financing problems in the transition from the market entry to the growth phase: the financing required for this is often very difficult to obtain. Of course, there should be many more initiatives - including political ones - to facilitate fundraising for this intermediate stage. Nevertheless, trust is the beginning of everything, and without adhering to the principles mentioned at the beginning, even a startup with excellent potential will find it extremely difficult to find the financial partners to scale with the necessary speed.