No-one will be surprised to learn that start-ups and small businesses in the United Kingdom play a crucial role in growing the domestic economy.

In fact, according to the 2017 Business Statistics briefing paper published by the British government, of the country’s 5.7 million registered businesses, more than 99% were small or medium-sized, employing between one and 250 people. What’s more, these businesses were collectively responsible for 51% of the entire private sector turnover.

Why is it that despite numerous government-backed initiatives aimed at encouraging people to start their own businesses and to help existing ones flourish, four out of five new businesses fail within their first year of operating? While there are clearly a number of reasons for the demise of any new venture, in this article I’ll make a few simple suggestions that I’ve gathered over the last few years of working in successful start-ups; I hope they will prevent your business from becoming a depressing statistic.

Problem 1: Micromanaging

While this problem may seem very obvious, you would be surprised to know just how many small businesses struggle with it. Despite the fact that any management textbook you read will tell you that the key to being a good manager is to know when to delegate, my experience is that as start-ups grow the founders struggle to loosen the reins for fear of the collapse of what’s essentially been their life’s work. They are so used to being involved in every decision, and working in numerous capacities, that when they begin employing senior people for distinct roles, they cannot stop themselves from wanting to be involved in every decision.

Not only is being a micromanager simply not scalable, but it can also curb productivity due to the time it takes to make decisions (you are essentially your own bottleneck), lead to widespread job-dissatisfaction, and ultimately result in high employee churn-rates.

Solution 1:

The solution is quite simple really – don’t be a micromanager. If you employ someone at a senior level, this should indicate that you trust them and that you are confident in their abilities to help steer the company in the right direction. It follows that you should trust them to make decisions on the company’s behalf, without always having to seek your approval. As hard is it may be, if someone is there to perform a specific role, you really need to let them do it. Just let them know beforehand that they’re entirely accountable for the decisions they do take.

Problem 2: Inadvertently becoming a consultancy

During my time working at a relatively early-stage technology start-up, this was an issue that perhaps not everyone (even the founder) was aware of. Having developed a relatively disruptive technology, we were in the process of bringing it to market and pitching it to some early adopters. However, during our initial meetings with these companies, we would always seem to come away with different feature requests or suggested improvements. While some of these customer requests would overlap, the main issue was what to do with those requests which didn’t.

Collecting feedback for any new product or service at an early stage is essential, but be careful about the extent to which you accommodate it. Going back to my own experience, we started to treat all the feedback that we received as gospel and often worked on developing features that only really addressed the needs of a single customer.  In other words, we had started to lose sight of our original objective and had inadvertently become a quasi-consultancy company creating features on request.

Solution 2:

As mentioned above, one cannot exaggerate the importance of gathering feedback from customers at initial stages of development. This information can help make the difference between a successful venture with a clear market-fit, and an unsuccessful one that has no use-cases. It makes more sense to carefully collate any feedback and focus on the requirements that overlap (in other words, which are in the most demand). In doing so, you’ll avoid the costly mistake of developing a new feature that meets the needs of one of your customers but which is marginal to the majority.

Problem 3: being too top-heavy

People seem too focused on their job titles rather than the responsibilities that come with them. At a start-up, one can certainly see the appeal of employing experienced individuals in senior roles, as this not only appeals to potential investors but also helps to build the networks that these new hires bring with them. However, in my experience, founders need to be cautious when recruiting senior executives whose CVs are more impressive than their work ethic.

While this may sound quite crazy (‘how could that person have gained so much experience if their work ethic was poor?’), I’ve personally had the experience of working for managers at start-ups who are so used to working in large enterprises with established processes, that all they do is delegate rather than get their hands dirty. Now, I know that this may sound a bit contradictory given how I was advocating delegation just a second ago but please bear with me. I am referring to relentless delegation. Sometimes senior hires are so used to having teams of people working below them, that they continue to assign people tasks rather than doing the work themselves. While this may work in large companies, it is not acceptable in start-ups where resources are scarce.

Solution 3:

While I’m obviously not advocating that you actively avoid hiring extremely experienced people, what I am suggesting is that you are careful about who you do hire. You need to make clear that everyone will be getting their hands dirty and you will use your judgement to gauge which candidates are willing to adhere to that. You should also ask yourself whether your team of ten or 20 people really needs a head-of-this, or chief-of-that. Surely a flat hierarchy where everyone is collectively working together towards the common good is more desirable than focusing on job titles that, let’s face it, don’t really mean much in the average start-up?

While there a number of factors which contribute to the demise of any new business, I hope that by reading this brief article you will be able to learn from my experience and avoid making unnecessary mistakes that can prove costly.