Sometimes pitches don’t go well. Maybe you’ve made a big investment that’s not panning out. Your growth won’t always materialize as envisioned.
Things happen—to everyone. Many of the young companies I advise get stuck in the early stages of their lifecycle.
Some of these companies have a hard time pushing past their problems, but this doesn’t have to be the case. Here are some tips young companies can use to stay in the solution.
Creating a Win-Win Solution
The freedom to fail is a powerful concept. When I started my last venture, the experience was daunting. Overcoming that initial inertia was tough. It all sounded great in my head, but I was spending money out of my own pocket to hire people and cover my business expenses. It got “real” very quickly.
I was working in an office full of egos and sharp elbows. This venture was my side hustle. And as it started to gain momentum, the venture became exciting.
Previously, I’d dreaded going to work in the morning—but my side project was liberating. I was in a win-win situation in that if my day job didn’t work out, I could simply put more time into my passion project.
Granted, there was a chance I would stumble and ultimately fail in my venture. But even so, it would still have been an incredible experience. I wasn’t worried either way.
Taking Risks & Fostering Resourcefulness
I wasn’t afraid of failure in my last venture. The creativity and ideas were free-flowing, and clearly I’d found the cure for that initial inertia. I became much more resourceful. I wasn’t afraid to reach out to new and transformative partners because the worst they could say was “no.”
I took risks like never before, and my venture grew as a result. The freedom to fail was among my greatest assets, and it empowered me to stay in the solution.
Let’s dive deeper into this concept. A few years ago, I was advising a company through a sale process. We reached out to what seemed like a surefire set of buyers. There were a number of serious discussions that materialized, but because the company had recently pivoted its revenue model, many buyers questioned the viability of its new strategy. Eventually, talks died down and we were all disappointed.
A few months later, an old contact was in town and told my team about his company’s new acquisition strategy. The initial company-for-sale met his criteria with flying colors. It seemed like a perfect match, and the new strategy was actually a key selling point in the eventual sale process.
The fact that the company was able to navigate a very difficult initial attempted sale process while continuing to prove its new model became a selling point. The company was resourceful with its capital, and continued to focus on the solution carried in its new model.
Embracing Setbacks & Temporary Failures
Resourcefulness is key—and so is embracing setbacks.
I previously helped a client venture out of their comfort zone. They were aiming to diversify by moving away from the consumer and into the enterprise. This was meant to pinpoint the company’s weaknesses and give it a greater base of high-margin recurring revenues. It was also aimed at changing the perception of this company, as a higher-quality revenue stream would garner a higher valuation and ease shareholder criticism.
After a few months, my client went out and bought a purely enterprise-focused company. Analysts didn’t understand the move. They worried that the company was moving away from its core business and questioned its ability to succeed in the enterprise sector.
Integration issues with the acquired company sprang a leak with the buyer, and problems arose throughout the organization. Critics piled on, and the company’s stock reached new lows. However, what outsiders failed to realize was that despite the hurdles, my client was learning to cater to the enterprise. The target was among the best in its sector at landing-and-expanding high-value clients.
Less than a year later, a new buyer came along. This buyer wanted to purchase the failed enterprise acquisition—and they ended up paying a significant premium to the price paid only a few months before. During the holding period, my client’s enterprise portfolio and sales teams grew extensively, and the company became much better-capitalized by its return on investment. The experience opened up a plethora of new, high-upside opportunities that wouldn’t have realized under other circumstances.
The company stayed focused on the solution—that is, on its pivot toward the enterprise—and never lost sight of this, even with the bumps and bruises it incurred along the way.
The Freedom to Fail Can Be a Revelation
One of my favorite projects involved helping an eCommerce company raise capital. The initiative was extremely opportunistic. The company was enjoying steady growth in its two segments, and believed a new round of capital could help catalyze further growth. One of its segments was a stable-growth cash cow that had funded the other high-growth, high-upside, unprofitable segment.
Before going to market, the company needed to flesh out certain elements of its strategy. This process of self-discovery helped transform the company in the long term. In its management presentations to investors, the company was met with considerable criticism of its model—but it made no apologies. It believed in the long-term viability of its strategy, and didn’t cower at the lack of capital being raised.
Eventually, the company decided to split the two segments into different companies so each could fully and independently focus on its respective strategies. Both companies were acquired by a much larger investor who has fueled both segments and provided a host of new opportunities. Together, the segments have grown more than anyone could have imagined.
They did this not by shying away from their visions or freezing up at the thought of taking their stories to investors. Instead, having no fear of failure helped them become more creative, clarify their visions, and gain an investor they wouldn’t have otherwise attained.