Building a startup is hard, but scaling a startup is even harder. 90% of all startups fail, and Only 0.6% of all startups cross the $10m revenue threshold, Looking at the current technical path, we can expect this number to go further down.
The founders think no. 1 reason startup failure was running out of cash, In my experience as a growth capital investor, running out of cash isn’t cause to failure, but a Result of failure. This is the result of founders’ failure to develop strong leadership skills, transition from founder to leader, and build a strong leadership team. If you want to take your business from initial traction to sustainable high growth, you must start developing your leadership skills now. the longer you wait leadership credit The more you spend, the more likely your startup won’t make it through the growth valley of death.
Leadership debt is usually spent already in the early-stage phase of a startup
In the early stages of a startup, founders usually focus all their efforts on execution. They form a small team. They make products. They invest in marketing and sales and generate the first revenue. They take all the big decisions themselves. But they don’t use the introductory stage to develop their leadership skills. They take ‘leadership loans’.
In the development phase, leadership loans can no longer be repaid
The situation is completely different at the stage of development. Suddenly, the company has grown from 20 to over 100 employees, who may be spread across offices, countries, and even continents. In the development phase, founders can no longer focus solely on execution. They cannot make all decisions themselves, but 90% of all decisions must be delegated to a strong leadership team. They are suddenly in charge of the people running the business. Unfortunately, becoming a strong leader who can attract, retain, and lead a strong leadership team is not learned overnight. It takes time and constant effort. When founders realize they should make the transition from founder to leader, it is often already too late. They cannot repay the leadership debt they have taken. Leadership debt incurred leads to bad decisions, which, in turn, lead to business failure.
Leadership debt can be avoided
You can avoid taking out a lot of leadership debt.
1. Take ownership of your leadership loan. If a company fails, it is no one else to blame but the leader. If you want to be successful, take ownership of your leadership debt. Work on your leadership skills and quickly develop a strong leadership team.
2. Work on your leadership skills. Don’t put off working on your leadership skills. Sure, there are always other things you can focus on. But ultimately, your success and the success of your business depend on how you transition from founder to leader. Do not postpone! act! Reading books! Listen to Audio Books! Take part in courses! Hire a Coach! Ask for feedback, listen and improve! Every day.
3. Develop a strong leadership team. If you have a passive leadership team, you have a passive organization. So, start building a strong leadership team early on. A strong leadership team can take important decisions on their own and help you make sound decisions. Make sure your leadership team is not just a team of functional experts. He should be the leader himself. Empower them and help them grow.
4. Watch for leadership credit traits. You will not be able to completely avoid taking out leadership debt. But you can minimize it and repay it if you notice it early. Some leadership credit traits are:
- TeaIm struggle and the team members blame each other. Constructive team discussions during which team members share diverse perspectives and provide critical feedback (including peer and above feedback) are essential to your success. Make sure you build a culture of trust where team members are ‘hard on the issue but soft on the people’.
- You have to accept many decisions. You want to retain the decision-making power for the most important decisions. Delegate the rest and empower your team members to make their own decisions. Otherwise you become a hindrance.
- High employee turnover. Strong talent wants to work for strong leaders. If you fail to attract and retain the right talent, it could be a sign of something going wrong in your leadership team (which includes you, of course).
- Teams work in silos. A team is a group of individuals who work as a team. You can achieve your goals only when your teams embrace teamwork and communicate with each other.
Developing your leadership skills can be the decisive action you take to make it one of the few startups that successfully make it through the growth valley of death. do not wait! act!
in my new leadership manual leading effectivelyYou’ll find actionable insights and frameworks to become an effective leader who leads with ease.
If you’re looking for a smarter route through the growth valley of death, you might enjoy reading my High Growth Handbook for Founders fast scaling,