One key for every CEO to clearly define her / his responsibilities and outline the gaps and what else needs to happen to effectively manage and grow the business. The CEO must manage hiring executive leadership team members to do these tasks and fill the gaps the CEO has identified through smart delegation and holding each leader accountable for growing a team under them.

It is just as important that the CEO ensure that each leader is an effective manager and / or can be trained to be an effective manager. Otherwise, the company is doomed and failure is around the corner.

For each new leader, to build and manage a dynamic team, it is imperative she / he avoid the “Smartest Person in the Room Syndrome” and that starts with these 5 leadership Don’ts:

1. Do not walk in the door thinking everyone before you failed – respect those before you as they likely accomplished a lot.

2. Do not think your new ideas are new – most often they are not new and they have been discussed, presented and / or evaluated before you arrived.

3. Do not walk in the door with an agenda – be humble and listen and learn before arriving at any conclusions.

4. Do not prejudge, as hard as that is – even if you have outside perspectives beforehand, leave those outside, walk in the door and start with a clean slate – then arrive at your own conclusions.

5. Do not walk in the door trying to move mountains – move a few pebbles while you learn, build credibility then develop a strategy to move mountains.

I would love to hear about your experiences with the “Smartest Person in the Room.” Give me a shout at harry@hollinesgroup.com or visit my blog and comment at https://hollinesgroup.com/blog/.

Remember, the key to leadership is Humility!!!

The post The Top 5 Startup Don’ts of Effective Leadership that Derail Startup Growth appeared first on Hollines Startup Growth Strategy & Transactions.

Although founders are preoccupied with funding and product design, it’s incredibly important to focus on your team’s diversity, too. Especially in these early days before you see tremendous growth.

Early stage companies tend to lack diversity. As a founder, you likely work with people who are your friends⁠—people with a similar background to yours. As social animals, humans subconsciously choose to associate with others who are like ourselves. It’s this bias that works against you if you want to grow a healthy, profitable startup.

The link between diversity and profits

Diversity isn’t a frilly concept or a box to tick on your to-do list. It’s a philosophy that should be part of your company’s cultural fabric. Although diversity is the right thing to do ethically, it’s also a sound financial choice.

The McKinsey company did a survey and found that, globally, gender-diverse companies were 21% more profitable. A 21% boost in profits is astounding, especially if you’re trying to bootstrap your early stage tech company.

But gender diversity is only one facet of diverse companies. Ethnic and cultural diversity is also critically important. The McKinsey study found that brands were 33% more likely to have better profits if they were ethnically and culturally diverse. Studies suggest a strong correlation between diversity and fiscal performance.

This happens because diversity leads to better ideas. Better ideas lead to more innovation, and innovation equals better financial performance. If you’re looking for investors or VC funding, you can’t afford to overlook diversity.

When your early stage company is earning more, your investors get a better return. Your diversity could be a big selling point to bring investors on board.

Studies found that female-founded business generated 78 cents of revenue for every dollar of VC capital. Male-founded businesses only generated 31 cents. Including female founders is important to bring on investors and give them a better return for the long haul.

How to be more diverse as an early stage company

As an early stage technology company, you live for scaling your brand. If there were a way to boost profits by 21%, shouldn’t you do it?

But it’s one thing to acknowledge the value of diversity and another thing entirely to make diversity a reality. Follow these steps to create a diverse startup that generates bigger ideas and better profits.

1.     Bring on diverse leadership early

From day one, you should bring people to the team who are unlike yourself. It’s easy to pick your college roommate as a co-founder, but this will limit your imagination.

Choose someone who doesn’t think like you. Choose someone that comes from a different background. Choose someone that doesn’t look like you. Choose someone that is not necessarily a ‘cultural fit’ but is a ‘cultural addition’. This is not only important to create a truly diverse workforce but it avoid ‘cloning’.

Studies suggest that at least one-third of your leadership should be female – and that one-third should be racially and ethnically diverse. This gives signals to ‘all’ female applicants that they’re welcome at your company. This is important if you plan to scale a diverse team over time.

Find females to fill leadership roles as early as possible. This will not only give you a good outside perspective but will attract more diversity as you grow.

2.   Talk about diversity

Diversity isn’t a rude subject in the workplace. When you talk about a concept, you make it real for your company’s culture. When you talk about diversity, it becomes a priority in the same way sales, marketing and product is a priority. This makes it easier to bring your dreams of diversity to fruition.

3.   Be transparent

Women and minorities are famously underpaid, especially in tech industries. Be a champion for salary transparency at your company. Allow employees to discuss their salaries. Pay your female and minority employees the same as their non-diverse counterparts. Don’t just ‘Talk the Talk’ but ‘Walk the Walk’. Be transparent about your pay scales. If you notice a pay discrepancy, address it immediately.

4.   Standardize hiring practices

Startups are famous for their laissez-faire interviewing practices. However, these practices send subconscious signals to potential candidates that they aren’t welcome at your company. You don’t have to sacrifice your company culture, but you do need to standardize hiring practices to level the playing field.

Ask the same interview questions with each applicant. Adjust wording in your job ads to be gender-neutral. This is especially important if you aren’t a member of a minority group yourself. You’re subject to unconscious biases that harm diverse applicants’ chances.

5.   Avoid stereotypes

Stereotypes make your diverse employees feel disenfranchised and unwelcome. Don’t reinforce tired stereotypes in your workplace. For example, don’t seek out a woman to fill the position of executive assistant. Don’t enforce strict dress codes based on gender, such as requiring women to wear heels and skirts while men can wear whatever they want.

The bottom line

The hard numbers show that diversity isn’t a nice-to-have concept. It has a real impact on your company’s success, especially in your early days. Institute culture changes early on to build a diverse, profitable company that excels.

Don’t try to diversify your early stage company alone. Get an outside opinion from someone who has fresh eyes. Chat with Hollines Group now to get your startup on the right foot.

The post How early stage companies can leverage diversity to increase profits appeared first on Hollines Startup Growth Strategy & Transactions.

In the early stages of a startup, you’re still deciding what the company will be. This means securing funding, building a minimum viable product, and carving out a niche in your industry. These businesses inherently carry more risk because they’re unproven in the market and still need time to mature.

Growth-stage companies, on the other hand, have proven their product in the market and have secured financing. They’re in the process of growing and trying to scale, but are encountering some obstacles to that growth. The focus here isn’t on pure innovation, but expanding on what’s already working for the business.

5 ways early-stage startups and growth-stage companies differ

Not sure what category your business falls under? Consider these 5 differences between early-stage and growth-stage startups.

1. Complexity of work

Running a business is always going to be hard work. However, the complexity of running your business will differ if you’re early-stage versus growth-stage.

Early-stage startups have less complex tasks. But that doesn’t mean it’s easy; this phase of starting a company requires you to become a Jack of all trades, often working long hours to bootstrap the business. This stage is all about learning how to DIY essential processes and being scrappy with your resources.

Growth-stage companies aren’t going through such an exhausting time, although they have more complex issues to solve. Payroll, investor ROI, and market demands mean growth-stage founders are under pressure to have a consistently successful business. Your work will still iterate and transform as a growth-stage brand, but now it’s about trying to meet market demands and stakeholder needs, too.

2. Culture

Startup culture is famous: it’s known for casual dress, beer Fridays, and interesting perks like free pet daycare. It’s easy to maintain a fun and productive culture as an early-stage startup, and that’s largely due to size. You aren’t managing employees when you have a company with 2 to 10 employees, for example. You’re more likely to hire people with similar backgrounds at this stage, which means the culture will stay consistent.

That changes as your brand enters the growth stage. When you get an HR department and allow them to hire new employees, you’re relinquishing some control over the culture. As the company expands, this can feel like a game of telephone: the message will change with the more people you add to it.

This is why growth-stage companies fight to maintain their culture as they grow. One bad hire can wreck your carefully-crafted culture. That’s why it’s important to prioritize healthy culture as you grow, modeling the culture you want to see with your actions and decisions.

3. Product-market fit

Does your product have a place in the market? Is it already tested and growing in your niche?

Early-stage startups are still trying to find their place in the market. It’s early days for their minimum viable product, which means the startup experiments with their customer base as they try to hone in on their sales approach and messaging. That means features, pricing, and positioning might change overnight.

Growth-stage companies have already validated their product in the market and can prove it’s sustainable. At this point, growth-stage founders are trying to keep the brand from plateauing. This means founders are trying to grow their existing numbers, either by expanding their team or breaking into an underserved market . . . it’s about scaling.

4. Risk

Every founder has to deal with some level of risk. But you’ll see that there are big differences in the amount of risk between an early-stage startup and a growth-stage company.

Early-stage startups are able to take more risks. They’re running lean teams of 1-2 people and maybe an investor who’s along for the ride. With fewer people depending on the startup for results, the brand is able to take bigger risks—with the potential of a bigger payoff. If a startup does fail, it isn’t a disaster because the brand hasn’t grown enough to experience a true disaster.

It’s a different story for growth-stage companies. The bottom line matters much more once you have employees and high-profile investors as company stakeholders. Growth-stage companies have a lower tolerance for risk for this reason; they have more to lose.

5. Hierarchy

Early-stage startups are all about the hustle: founders wear all of the hats in the company, fulfilling orders while they try to figure out QuickBooks. The goal is to do as much as possible yourself so you don’t have to outsource tasks, saving capital.

Growth-stage companies are finally at a place where they can afford to hire team members with specialized skills. That means they’re starting to build a skeleton staff, creating departments and hierarchy within the small company.

This is good, because it means founders can focus on their vision and let employees take over more specialized tasks. But it’s a challenge to outline how the hierarchy works, and for inexperienced founders, the added moving parts can get messy.

The bottom line

Whether you’re in the early stages of a startup or you’re starting to see growth in your company, it isn’t easy to know where to turn. Avoid the delays, nasty fines, and lost income that come with bootstrapping everything yourself. Instead, rely on a trusted advisor like Hollines Group. Now’s not the time to plateau—it’s time to scale upwards. Get in touch with us now to brainstorm your brand’s next big move.

The post The Difference Between Early-Stage Startups and Growth-Stage Companies appeared first on Hollines Startup Growth Strategy & Transactions.

You could speak with dozens of investors before one agrees to partner with you. But are they really the right fit for your business?

As a startup founder, you have to learn how to sift through investors to find the right match. Go beyond capital investments and find someone who has a stake in your development.

How to find better investors

Early stage companies don’t always need more money. If anything, you need the right investor at your side to make the best use of your existing resources and guide you around common pitfalls.

Here’s how startups can connect with better investors.

1.   Define your ideal investor

It’s easier to find your ideal investor if you know what qualities to look for. Make a list of criteria for your investor. What background, experience, or personality do you want? This will help you determine which investors you shouldn’t pursue so you can focus your time on the best potential investors for your company.

After developing a list of criteria, the real work starts. Research and identify a list of investors who fit these criteria. Go after reputable and well-known investors in your industry. To start building your list, speak with other startups, consult local news, or use sites like AngelList.

2.   Do your research

Once you compile an Excel sheet of potential investors, do your research. Determine their specialty, education, similar investments they’ve made in the past, their track record and success, and contact information.

Once you’ve done your research, it’s time to pitch. To best manage your pitches, consider using a customer relationship management (CRM) platform.

Store all information about investor outreach in one place so you monitor and track outreach efforts. This streamlines the search for investors and keeps your co-founders in the loop about who’s been contacted already.

3.   Network

Some of the best investors are right under your nose. Go local and ask your network to find the best investor for your business.

Attend university mixers, casual parties, professional get-togethers, and conferences. These are your chance to build a relationship with fellow attendees.

Remember, networking is about fostering a relationship. You can let people know about your company and that you’re pursuing funding, but don’t go in and ask for financing at first blush.

Be patient. It might take months to build the right relationships, but it will have a big payoff for your business.

4.   Join an accelerator

Accelerators offer programs that train you as a founder to get your business off on the right foot. It’s a great option if you’re looking for mentorship, community, and support as you grow your business.

Depending on the accelerator, they may set you up with meetings where you can connect with investors. Accelerators give you a big network not just of investors but also of potential mentors and fellow founders. I would with several Accelerators in the area and I can attest to the benefits of engaging that community.

5.   Ask for referrals

Investors are sometimes wary of working with people they don’t know. You can build trust quickly with an investor by requesting a referral from your network. Warm referrals vouch for you and help you build a relationship with the investor.

Even if an investor isn’t the right fit for you, they may know someone who is. Don’t be afraid to ask for referrals and connections; they’ll take you far.

6.   Trust your gut

Investments are a financial decision but you’re also giving a portion of your company to the investor. They’re going to have a seat at the board room and this isn’t a step you should take lightly.

It’s important for early stage companies to establish a positive working relationship with investors. You’ll be working with this investor intensively to get your project off the ground. You need to share common values, interests, and vision to pull the project off without a hitch.

Even if all the numbers line up, it doesn’t mean the investor is right for you. If they make you uneasy for any reason, don’t follow through with the deal. The right investor is out there for you, and choosing the wrong one could be disastrous for your business.

The bottom line

The right investor helps you avoid the mistakes that come with creating a new business. It’s never too early to start looking for funding for your startup. The right investor will not only boost your business with their capital investment but also the guidance and resources to help you grow. Put your head together with an investor and partner who’s been there before.

You don’t have to go alone to find the right investor. Partner with The Hollines Group to seek out the best investor to grow your business for many years to come.

The post 6 Essential Steps for Startups and Early Stage Tech Companies to Find Better Investors appeared first on Hollines Startup Growth Strategy & Transactions.

However, I know from working inside companies for decades and trying to build my own company that saying ‘No’ is essential to success.

The companies I worked at that had a clear and thought out strategy would say ‘No’ to many engagements to stay focused on executing the core strategy. On the other hand, companies I’ve worked at that did not succeed or failed to reach their potential always said ‘Yes’ and chased every opportunity that knocked on the front door.

That inability or reluctance to say ‘No’ is one of the reasons startups and early stage companies fail . . . I refer to it as the ‘I can’t say no’ pitfall.

On this point, I remember Berkshire Hathaway CEO Warrant Buffet once said, “The difference between successful people and really successful people is that really successful people say no to almost everything.”

From my perspective, here is what saying “No” represents and why it is so critical to success:

1. ‘No’ means you clearly defined what is in the “Yes’ bucket otherwise you are not comfortable responding ‘No.’
2. ‘No’ means you believe in your go-to-market strategy and business model and this should be applauded.
3. ‘No’ represents discipline and that is a key attribute of success.
4. ‘No’ means neither you or your employees will waste valuable time chasing deals that do not make business sense and instead laser focus on executing the core strategy and scaling the business.
5. ‘No” requires confidence and all the great leaders at successful companies have at least one thing in common . . . they are confident – if not conceited – in what they are building and how they are building it.

In reminding myself of the context in which Buffett made his statement, I came across the following article in which successful leaders and advisors were asked if they agree with Buffett.

What about you? Do you agree with Buffett? Can you recall a situation where you walked away from a deal? Do you remember continually changing ‘Who’ and ‘What’ your business stood for in an attempt to win any deal?

Tell me about your experiences and always feel free to drop me an email at: harry@hollinesgroup.com. Also, download our free eBook at www.hollines.com on how to avoid common growth roadblocks .

The post Why Saying “No” is Critical to Success appeared first on Hollines Startup Growth Strategy & Transactions.

The post 5 Things We Did to Deliver our Most Profitable Month appeared first on Hollines Startup Growth Strategy & Transactions.

Why do we accept failure as an inherent risk of founding a startup? Failure isn’t an option when you leave your life’s work on the chopping block. We don’t need any more early stage companies to taste defeat.

After 20 years in business development, corporate development and law in the technology industry, I’ve seen my fair share of failures. However, after advising and investing in many startups myself, I’ve come to realize the real reasons startups fail.

Pitfall #1: The 1,000 ping-pong ball strategy

Every startup wants growth, expansion, and scale. They have to determine how and where to sell more products and services at scale.

The problem? Most startups go too far. Instead of juggling a few ping-pong balls, they pick up hundreds more in an effort to be the best. I’ve seen that most startups will do whatever they can for their customer, supplier, or partner to make a sale happen.

This results in what I call market and sector “dabbling.” Because startups flex to make sales (any sales), they have a handful of customers spread across multiple sectors.

Suddenly you have more ping-pong balls firing at you from multiple directions. You have a small sample size of clients and little credibility in the market. You can’t specialize in or understand a specific sector because you’re all over the place.

The solution

Unfortunately, most startups don’t have time on their side. You have to pick the right sector and market as soon as possible if you want to scale.

Ask yourself one important question: “What real, meaningful, and identifiable business impact do we give the customer?”

I’m not talking about soft business drivers, but hard, measurable impact. Demonstrate how you save customers time, money, or frustration in a meaningful way. This will keep you focused as you grow in the right areas.

Pitfall #2: The “It depends” business model

Has a customer or investor ever asked you, “What’s your business model?”

If your answer was, “It depends,” you have a major problem. This steals focus away from your startup, leading into Pitfall #1 and a cycle of failure. 

You can’t change your business model to suit a different customer every day.

Every company, no matter its size, needs a scalable and repeatable business model. This business model must align to the key business drivers for customers in your market. A solid business model is critical to growth in any market sector.

The solution

Determine what your business stands for. What kind of business are you building?

Whatever your model, stay true to it. Be willing to walk away from a deal if the opportunity doesn’t align with your model.

The sooner you recognize a bad customer-model fit, the sooner you can move on to the next opportunity.

Pitfall #3: “I can’t say no!”

This point links back to all the other Pitfalls, but it deserves a special mention.

Look back on your business dealings in the past year. Can you remember a situation where you walked away from a deal? Do you remember continually changing your business model or strategy to win an individual deal?

If this happened to you, you don’t know how to say “no.” When you morph to fit every opportunity that comes your way, it’s impossible to have a repeatable, scalable, or profitable business.

The solution

Pick a strategy and business model that works. Use this model as a yardstick for every new opportunity.

If the opportunity doesn’t match your model, simply say “no.” It’s that easy.

Pitfall #4: “All I know is they purchased it”

Do you know why customers buy from you?

No? Unfortunately, you aren’t alone. It’s astonishing how many startup and early stage companies don’t know why customers buy from them.

What’s more alarming is how few companies take time to understand their customers. The result is startups wasting resources on products that don’t address customer pain points, ultimately leading to failure.

The solution

Talk to your customers. Listen to your customers. Invest the time to reach out and understand why they buy from you. Verify that they’re actually using the product and not simply purchasing and abandoning it.

What problem does your product address? What more could it do for your customers?

Quantify the value of your product for customers, whether in time saved, tasks streamlined, or money saved. Use these as metrics to market and improve your product over time.

Pitfall #5. “I don’t know how to lead”

Let’s take a page from sports here.

A head football coach can’t defer blame to an assistant coach. No matter the circumstances or actions of their subordinates, failure falls to the leader.

In the case of a startup, failure always falls to the CEO, regardless of the actions of other executives or employees. It’s this failure to lead that causes so many companies to fail.

Leadership has nothing to do with capability, experience, or your IQ. Most CEOs are incredibly intelligent.

The problem is that most CEOs fail to define their role as CEO. A CEO needs to understand how he or she works in the business. This helps them hire capable folks to handle key business tasks outside the CEO’s skillset.

The solution

There are so many types of CEOs. They have varying backgrounds in finance, product, legal, marketing, sales, strategy, operations, and more.

The key is to understand your area of focus as the CEO. What is your experience? What are your daily duties as a CEO?

Once you’ve defined your responsibilities, outline what else needs to happen to run your business. Hire team members to do these tasks through smart delegation. Hold each leader accountable for growing a team under them.

This sounds simple enough, but delegation requires a lot of awareness, confidence and emotional intelligence.

Some CEOs naturally develop these skills in life, but many others need to work on self-awareness. Leverage counselors, mentors, and consultants to help you improve your leadership style.

The bottom line

These five pitfalls are responsible for the failure of many great startups. Don’t let your early stage technology company fall prey to these mistakes.

Scale intelligently to bring your solution to the world. Skate around these pitfalls with a trusted, experienced advisor like The Hollines Group.

Sign-up above our weekly newsletter and shoot me a quick email at harry@hollinesgroup.com to brainstorm and discuss your business strategy.

The post The Real Reasons Startup and Early Stage Companies Fail appeared first on Hollines Startup Growth Strategy & Transactions.