Her first venture, OsoEco.com (healthy social shopping), dissolved in 2009. Her second venture, RealLead (mobile marketing for real estate) sold in early 2012. She has co-founded several successful entrepreneurial programs for the Eugene Area Chamber of Commerce, including Smart-ups Pub Talks and the Southern Willamette Angel Network. Not only has Caroline had an amazing career where she has had the opportunity to be both entrepreneurial and intrapreneurial, she strongly believes in paying it forward through mentorship. “I think the secret to the universe is mentoring,” said Cummings.
She has created what she calls “The 10 Reasons Why a Startup Fails” to help other entrepreneurs avoid some of the detrimental mistakes that she has made and witnessed over the years.
1. The Wrong Team – as Jim Collins noted in his book Good To Great, “start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats.”
2. The Single Founder – finding the right co-founder is critical. To find the right partner you have to be able to recognize the skills that you do not posses and be willing to admit that you have shortcomings.
3. The Wrong Legal Team – Caroline found that having legal counsel that was not well-versed in business law was one of the biggest mistakes that her failed business encountered! Make sure you have sound, credible counsel and do your due diligence.Caroline suggests that you need to trust your gut when it comes to your legal counsel but also has laid out some questions that you should ask any legal representative you are considering:
- Have they worked with your industry?
- How much time do they have to spend with you?
- Who else do you go to if they cannot be available to you (partners)?
- Have they raised rounds of financing before?
- If so, have they created/read a Capitalization Table?
- Have they done compensation packages?
- Do they have experience with IP protection?
- Do they have experience with Global Expansion?
- Do they have experience with exits, M&A’s, IPOs?
4. Boiling the Ocean – Is your concept completely new? Will you have to teach your potentials consumers about your product, will there be a learning curve? Can you borrow techniques that have already been created or partner with companies that already exist?
5. Not Talking to Customers – often entrepreneurs do all of their concepting and creation within a bubble either because they are afraid someone will steal their idea or because they want it to be perfect before releasing it to the world. Lean Start Up methodology has taught us to find our MVP (Most Viable Product) and roll with it. Test the product, concept or service to see if it is viable. It doesn’t have to be perfect right out of the gate, get feedback, make changes, pivot where necessary. Include your customers in your research and development.
6. Stealth Too Long – If you are too slow to draw, you may miss your opportune time to launch or worse yet, someone else might beat you to the finish line. Take advantage of all of the tools and information out there to help you get your business up and running (like www.chic-ceo.com and many easily accessible books like “The Art of the Start” for example.)
7. Stuck on Original Idea – although it is important to have a clear direction for your company, you must be nimble when it comes to having a successful startup. Opportunities arise, projects fail and situations change.
8. Taking Dumb Money – when you are raising capital and spending money other than what your company has generated, you get a say in the transaction. Don’t just take a deal because you need the money, be smart about what the money brings with it. Look for investors that are willing to mentor you, introduce you to contacts and take a significant interest in the success of your organization.
9. Founder-itis – “An organization faces founder’s syndrome or founder-itis as the scope of activities widen and number of stakeholders increase. Without an effective and inclusive decision making structure and process there is potential for conflict between newcomers who seek effective involvement with organizational development and the founder(s) who seek to dominate the decision making process. This can be very disruptive both to the organization and to the individuals concerned and should be carefully and clearly diagnosed and addressed quickly and decisively.“
10. Spending Too Much Money – Often startups think that once they hit a certain threshold they can become less frugal. Frugality is a virtue that many startups have a hard time managing. It is important to be willing to spend where necassary but to manage the bottom line. Luxuries like fancy office spaces may not be necessary in the startup phase.
By Jody Coughlin, Forbes Contributor
Jody Coughlin is the CMO and co-owner of Chic CEO – a free resource for female entrepreneurs. You can follow her and Chic CEO on twitter at @ChicCEO.
You might also like…
Seven Steps to Negotiating Success