There’s a big trend in the world of start-ups today: mantra-esque soundbites. People are encouraged to fail fast, fail often – it seems that, on LinkedIn at least, everyone is spouting the same advice in the modern version of a get-rich-quick scheme.
The advice: grow big, and grow fast. But what about the foundation of the business?
This method typifies the difference between being a salesman and a business leader. For the former, you’re building a product (the business). For the latter, you’re creating something long-lasting and bringing a team along for the ride.
It’s just part of the culture but, put bluntly, it promotes short-term optimisation at the expense of long-term vision.
Snapchat, one of the world’s largest social media platforms, was founded with growth in mind. They grew big, and they grew fast. Despite this behemoth leap to nearly 200m users, profit has never materialised. Indeed, the $5bn valuation of the company founder dropped to around $2.5bn in recent years. The problem was (at least up until the 2019 strategy for the company emerged) chasing growth goals at the detriment of profitability.
That’s not to say that setting goals like this is a bad thing – far from it. Planning to be at a certain stage within a particular amount of time is a remarkably effective driver. It helps light a fire under whoever is following those goals. The problem comes when that goal is the be all and end all – when they’re set for their own sake. Once that goal is reached, what then?
In a sense, the setting of these goals is an important indicator of success – whether the business achieved what it set out to achieve in the timeframe that was allocated. Following goals like these to the detriment of everything else, however, is building a house on a foundation of sand.
I’m of the opinion that staff are the greatest asset a business has. The more we invest in them, the better they perform and, in turn, the better the business performs. My question is this: How can you effectively motivate a team towards a shared vision – a shared success story – if your only major focus is short-term growth? Staff retention, for example, is dependent on stability in many cases.
A recent article in Forbes highlighted the main reasons that top performers left the business to work elsewhere. The key reasons were that these employees were unengaged, disinterested and saw the company focus was not on its staff.
The real foundations of a business can be condensed into the following areas. Strategy, staff and sterling (other currencies are available). If the right people are on-boarded in the business, when combined with a flexible cash flow and long-term strategy, the process of growth becomes more clear cut.
We see many new businesses focus on growth first, when instead they should focus on the foundation – the overarching success of the business. It’s a case of one hand washing the other. While it can be easy to get carried away with exciting innovations and projects, it shouldn’t be at the detriment of ensuring your house has a sound foundation first and foremost.
One of the most important tools in my own journey has been optimism – the belief that what we are doing is valued. Starting vouchercloud in the midst of the 2008 recession was certainly a challenge, but our customers have always shown a desire for affordable everyday items.
My advice? Start your business like it will be your last. Give it everything you can and dedicate your efforts to long-term growth strategies as well as short-term considerations.
Previous columns by Greg Le Tocq: