It’s no surprise to most founders that our chances of success are slim. We are not oblivious to the common understanding that if you are running a business… chances are that your startup will end up in a graveyard rather than a corporate high-rise building. In today’s world, over 90% of businesses go under within the first 5 years (Investopedia). But despite the deck being stacked against us we continue on 💪 and so it’s our job to give our idea the best chances to succeed possible. This led my cofounder and I to come up with a system to identify and resolve the most critical challenges facing our business and we’d love to share it with you.
What is “Fixing Failures?”
The idea is simple. There is only so much time a company has and there are hundreds of potential reasons your idea may fail. It’s daunting and running out of money, personal & business, is a real concern (especially if it’s pre-revenue like some of our early ideas.) Understanding how long you have to live is key and this is most commonly called the “Burn-rate” or “oh shit we’re gonna be screwed if we can’t figure this out-rate”. Corporate Finance Institute has a fantastic article covering this in more depth but for now here is what you need to know.
This means if you have $15,000 in your bank account but you are spending $5,000 a month you have to figure this out within the next 3 months 😬. In our early ideas our burn-rate was usually 3-6 months. This meant we had to be constantly identifying what will be putting us out of business and coming up with solutions to those problems now.
But how do we identify all of our challenges when there are so many? That’s where the idea struck to lay out all of our challenges on pieces of paper and start categorizing them into a few simple categories.
STEP 1: “Identifying Risks”
– Spend 15 min writing out every single reason you can think about why your company could fail. This is just rapid-fire. Your goal is to get as many potential risks written down as possible. I personally like doing this on pieces of paper or harder styrofoam boards so they can be reused as you build on this in months to come.
STEP 2: “Categorizing Risks”
– Here you will break your challenges into four seperate Categories.
The first thing you will do is immediately take every “risk” you have which is out of your control and move it to “Can’t Control”. You only have so much focus and bandwidth in a given day. Don’t let uncontrollable items consume your time. We have a saying at our company, “Control your controllables” which was spun out of this practice. During this step we also move over any “risks” that you’ve already handled. This is an incredible list to see grow as you do this practice every month or two.
The next part is to take any remaining risks which you think are less likely to hurt your business in the short-term but they do pose long-term challenges. We don’t want to ever forget these “risks” but since they aren’t as important they don’t require much of our focus. The only exception to this rule is when something on this “Future” list is something that will never be solvable. If a long-term threat needs to be addressed today or else you’ll never succeed please put it in the “immediate” list. An example of this would be if your business requires some sort of legal certification/approval.
STEP 3: “Make Action Steps to Resolve These Immediate Risks”
What you have left in your pile is your most critical challenges and addressing them will be key to keeping you alive. That’s where the name “Fixing Failures” comes from. Your goal here is to spend the next 1-2 hours going over these immediate “risks” and coming up with at least 2-3 “Action Items” you can take away and immediately start applying to your business. If you are on a founding team you will want to make sure you collaborate to see which individuals will be handling which “Risks”. In the next 4-8 weeks ~75% of your time should be focused on these immediate items in order to make sure your idea doesn’t become one of the 90% in the statistic.
Then simply continue this process every few months. How often you do it is totally unique to your scenario and as you grow you might find yourself doing this less and less as you reach more stability as a company.
The early days of your business are the most exciting, nerve-wracking and challenging time periods of your company but they also leave you with some of the best memories and lessons learned. In closing, I wanted to end with this incredible TED Talk from Bill Gross who’s helped start/fund over 100 companies and summarized his experiences in just 6 minutes. I highly recommend you give it a watch.
We truly wish you the best of luck and as always if you need anything please do not hesitate to reach out.
Cofounder – Founders Approach