Success In Startup Is All About What You Don’t Do
All entrepreneurs, especially first-time entrepreneurs, spend an inordinate amount of time chasing down opportunities that never materialize. A tricky lesson I’ve learned in over 20 years as an entrepreneur is that the better the entrepreneur, the more opportunities they say “no” to.
I realized that this doesn’t happen only because the successful entrepreneur has the cachet (and the cash) to be more selective than the average entrepreneur. Rather, they’ve developed a sense of when to hold their ground against the lure of something that may look fruitful or even necessary in the short term, but will be a drag on business in the long term.
To put it another way, the ability to be discerning isn’t something that comes from success; it’s something that creates success.
If success came about solely due to hard work, we’d have a lot more successful startups. The vast majority of founders work crazy hard. The problem is they usually end up working crazy hard on the wrong thing.
Hard work actually becomes a detriment when it’s focused in the wrong direction. Moreover, hard work can sometimes be a misguided attempt to right a ship that was going to veer off course no matter what.
The wrong thing can manifest itself in a number of ways. Below are some of the most frequent temptations and some strategies for when, why, and how to say no.
Signing a large customer that’s more risk than reward
This is by far the most frequent mistake because it’s the hardest opportunity to say no to. Every early-stage startup should take on every customer they can, for any work, at any price point. Eventually, though, this behavior needs to stop, or the losses will strangle the company. But strangely, a lot of founders never get to the point where they start saying no; instead, they wind up taking on more and more unprofitable jobs.
One of the hardest things I ever had to do as an entrepreneur was turn down a $3 million deal with a Fortune 500 customer. It would have been more than 100% of our run rate at the time, but the customer was toxic…