Interrupting the 5 Phases of Failure for Startups.....

I recently gave a talk to a group of 120 startup tech businesses and I was quite surprised by the interest it generated.


So I thought I would share with you the simple scenario that I shared with them. It’s something I have witnessed numerous times and maybe some of you have seen it too. It’s certainly not for the faint hearted.


Here’s the frightening story. We all know that over 90% of new businesses in the Uk fold within the first 18 months. The vast majority of these fail because they are unable to find enough customers and they eventually run out of money. In my experience many of them go through 5 distinct phases which I have decided to call The 5 Phases of Failure (yes - shocking title I know!). 


Here’s a very brief summary of the 5 phases:


  1. Build a website (then realise that traffic is hard to get)
  2. Attend networking groups and events (until you find that they are attended by the wrong type of people for your business)
  3. Switch to LinkedIn (until most of your contacts stop responding)
  4. Move to Social Media and send out lots of posts to total strangers who don’t respond - or care
  5. Spend your last few thousand £s on Google PPC campaigns (probably one of the fastest ways to burn through a pile of cash)


At this stage many founders are left with no option but to wind up the business and probably return to a job like the one they left 18 months earlier. It turns out that many people in the audience were at stages 3 or 4 and we could hear the pennies dropping one by one.


The sad thing is that this sequence is both predictable and preventable. The 5 phases can be interrupted at any point. One of the biggest mistakes that many businesses make is that they focus on how to reach a lot of people without taking enough time to focus on their message. If the message and the value proposition are not compelling enough it doesn’t matter how many different places you take it to. So the key is in the message not the medium. I like to explain it as…. “If you take the wrong message to all the right places, the wrong message will win every time." But if you have the right message, it can work extremely well on almost any platform. 


I encourage the people and businesses that I work with to invest a lot more time in developing a message that will connect and engage with their target audience far better than most currently do. I use a model which forces them to look at what they do from many different perspectives and we even role play these scenarios repeatedly until it’s working really well (yes - good old fashioned role play - remember that?).


Unfortunately it’s not quite as simple as coming up with a sexy strap line for your product or service. The powerful messages that I refer to consist of multiple messages that serve different purposes at different stages of your interactions with potential customers. These messages do not all come from you either. Some of them will come from the customer and are therefore influenced by the questions you ask. So we spend a lot of time working on creating the right questions to ask in different situations. Ironically I am a big fan of social media, online advertising and the use of tools like LinkedIn. I simply believe they should complement rather than replace direct interaction.


If you are to take away one message from this story it is this: Invest the time to get your messaging right. Don't hide behind technology. Your message needs to be simple, valuable and unique, and it needs to connect with your target audience.


Written by Jonathan Mama

Director, Business Coach and Mentor at Hampton Green Limited


Get in touch with Joe on Linked In here

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