The promise of startups is grand: take a game-changing idea, add tech-savvy friends, sprinkle it with investor money, stir for 18-hour days with Skittles and coffee, and what do you get? A business that changes the world? Rarely. In most cases, you get failure—hot, messy, often spectacular failure.
But what if there was a way to tell your startup was in trouble? What would happen then?
It’s not an exaggeration to say that most startups don’t last. Roughly 90% of all startups fail, 20% in the first year, and 70% by the end of a decade in business. Failure in startup land has become so normalized that there’s even a storytelling event called “F<#%up Nights,” where participants tell the tale of their greatest business flame-out and how they rose from the ashes like a phoenix from Arizona.
While startups fail for various reasons, they don’t often do so suddenly and without explanation. Like a bad Saturday night poker player, a failing startup will exhibit one or more “tells” a sharp player will notice, then immediately move to hedge their bets elsewhere. Surprisingly, one of the most obvious failure “tells” is found in the language that the startup uses.
Let’s take a deeper look at why startups fail, the typical ways you can tell when a startup is not doing well, and the twenty-one “telling” sentences a startup uses that mean it’s in trouble with a capital “T.”
Why do startups fail?
Before you start getting depressed by a blog post about startup failure, let’s emphasize that many startups succeed. For instance, 51.3% of all new mining businesses are still in business after five years, so never let it be said that digging a hole in the ground will get you nowhere.
It’s also important to understand that failure is a learning experience that benefits those who don’t give up. That’s why previously unsuccessful founders have a 20% likelihood of success, whereas first-time founders have only an 18% chance.
Admittedly, those numbers only give you a faint hope of success, so here are the top five all-too-common reasons why startups go to an early grave:
1. Run Out of Money
Running out of cash flow is the number one issue that causes startups to go down. Not having funds to pay employees, scale the business, or build the product is the surest way to fail. A study of 110 startup failures determined that 38% of respondents ran out of money or could not secure additional funding.
2. Poor Market Research
“Do your homework” may be the one thing we learned in school that applies in all work situations. Many startups fail because they haven’t adequately researched the marketplace and established a customer need for their product or service. They may not have properly researched the product niche or the competition, and wind up left out in the cold as their competitors crush them.
3. Flawed Business Model
The wrong business model can kill a startup pretty quickly. Entrepreneurs get caught up in devising a solution, then fail to create a business model that’s both sustainable and precisely what the market needs. Not being ready to pivot your original business model to one that encompasses new channels or allows you to scale revenue can be fatal.
4. Missing the Right Marketing
Your startup may have created the most incredible product since sliced bread, but if no one knows about it, you will have difficulty selling it. Lean startups that skimp on marketing miss out on finding their ideal target audience, engaging them where they are in their buyer journey, and converting sales to an audience that needs, wants, and will evangelize their product. Without the right marketing, your startup will surely fail.
5. Terrible Team
If you want to win, you need a strong team with the skills and experience to pull together and get the job done. Unfortunately, many startups can’t assemble the talent and personalities that lead to success. Sometimes the problem starts at the top, such as bad partnerships or when founders need to be protected from themselves. Poor hiring decisions or budget shortfalls also keep good ideas from having the right team to develop them.
Other common issues that result in startup failure include poorly timed product launches, ignoring customer feedback, technology problems, legal troubles, and lack of experience in the market.
Warning Signs that Your Startup Is in Trouble
Now that we know what leads to failure, diagnosing the symptoms that point to a startup on the downslope to failure is easier. Here are some surefire signs that your startup is in trouble:
- Your cash flow is negative and has been for a long time.
- Your startup spends money on the wrong things (like foosball tables) and not the right things (such as salaries and marketing).
- Your product is outdated or has zero demand in the market.
- You can’t establish customer traction or engagement.
- Improper execution of product development or launch, because it’s being done incorrectly or slowly.
- Your MVP tries to be everything for everyone and doesn’t solve a simple issue for a particular audience.
- You throw a lot of marketing spaghetti at the wall, and none of it sticks.
- There’s a lot of employee turnover or infighting.
- You’ve forgotten why you founded the startup in the first place.
- Your startup team communicates in the language of failure.
It’s this last warning sign that we’re going to dig deeper into because the language of failure is insidious. In general, our language frequently conveys to others how we want to be treated, or shows our self-doubt and fear. When we speak to people, the words we choose and the ideas we convey form a picture of who we are and what we stand for—and it’s the same for startups.
21 Sentences That Mean Your Startup Is in Trouble
Seemingly innocent phrases spoken aloud or transmitted in email can subliminally undermine an organization’s confidence and poison its mindset. Or they can be a flashing red light, indicating imminent failure is at hand. With that in mind, it makes sense to look deeper into the actual meaning behind what our startup is saying. It could even save your business.
Here are twenty-one sentences that mean your startup is in trouble and why, broken down into three categories—your strategy, product, and operations and marketing:
Troubling Sentences About Your Strategy
1. We don’t have any competitors.
First, this just sounds ridiculous. Secondly, this sentence has two possible outcomes. Either (A) You’re wrong, or (B) You’re right, and you should probably ask yourself, “Why?” The truth is that you probably have substantial direct and indirect competition across many areas. You need to quickly discover (A) who they are, or (B) why you don’t, before your startup is consigned to oblivion.
2. We don’t assume anything about our customers.
Then you’re wasting time and money. Look, assumptions can be, and are, dangerous. But if you’re a startup, time is not a luxury you have. If you need to get to your next funding round in a better place than you are today, you will need to make guesses, predictions, and assumptions—and hope you are correct. Certainty is not a luxury you have.
3. We don’t need a roadmap—just sprints are enough.
Going fast to achieve an objective will get you nowhere if you don’t have an overarching destination. A product roadmap defines the strategic view of where your product is headed over the mid-to-long term, and is closely tied to your startup’s long-term goals and ultimate vision. Having your sprints organized by the guidance of a roadmap ensures that they lead toward the right end goal. Those who wander without a map are lost.
4. I want to see “hockey stick” growth.
The classic “hockey stick” projection sails upward on a graph after a small early drop to reflect upfront investment. “Hockey sticks” are simple to create, but they don’t often result in goals, so you shouldn’t want to see them. A “hockey stick” growth trajectory is likely unsustainable and difficult to repeat on an ongoing basis. Slow and steady wins the race, and the loser heads to the penalty box.
5. We’re lacking visibility.
What you’re actually lacking is a critical understanding of data and making data-driven decisions. Startups that use data-based decision-making produce real-time insights and predictions that improve their performance. Then they can evaluate the efficacy of various methods and decide which actions will result in sustained growth.
6. We’re disrupting the industry!
Disruptive innovation is meant to serve as a warning to large corporations. However, because disruptive businesses and technologies initially appear harmless, they can be difficult to identify because the impacted industries don’t recognize what is happening to them. If your startup is running around bragging about how disruptive it is, it’s telling the enemy what it’s doing and inviting them to destroy your startup before you get a chance to disrupt anything.
7. That’s the way we’ve always done it.
These are famous, fatal last words. No startup will ever succeed with a complacent, closed mindset that fears change and refuses to acknowledge that there might be a better way to do things. It’s always better to ask, “What are some new ways we can approach this challenge or opportunity?” before your startup develops bad habits and goes the way of the dinosaurs.
Troubling Sentences About Your Product
Kevin Costner is probably at fault for this ludicrous statement that’s doomed far too many startups. The truth is that even if you build it and it’s the most amazing product ever, no one will come without hearing about it—that’s why you need effective marketing that engages your ICPs. [Side note: If you are wandering in a cornfield and a ghost tells you to build a startup, see a doctor immediately. Or an exorcist.]
9. First we sell it, then we build it.
The opposite of “If you build it, they will come,” this familiar aphorism is just as wrong. The problem with this mentality is that you could build a product for a very small market. First, do your research, then build, test, improve, improve, and continue to improve.
10. The product doesn’t need any improvements.
It’s incredibly rare to find a product with ideal functionality that generates evergreen customer delight and continuously creates returning sales and new sales. But even in this situation, you’d leave money on the table by not seeking to improve it. Why? Because if the marketplace is interested in your product, it still has room to grow. Improving the user experience, branding, or connecting the product to a larger ecosystem offers excellent opportunities for improvement, growth, and a bigger bottom line.
11. We’re past the product-market fit stage.
News flash: you’ll never get past the product market fit stage. For successful, sustainable products, it never happens. Why? Because product-market fit is an ongoing process. From the initial concept to the first customers to scaling to meeting increased demand, adjustments will always be needed between the market and the product they want. Stay agile, my friends.
12. Test everything! -or- Let’s just A/B test it.
Constant product improvement is the name of the game. The key to success is to be confident enough to launch with an MVP and agile enough to make changes. Getting caught up in testing every possible permutation is a waste of resources, and only testing two variations is a vision that’s far too narrow.
13. We’re going to add some features requested by Client X.
Yes, but what about Clients Y and Z? One client’s opinion is not enough data to make a decision. Always keep your target audience in mind and who your ideal customer profile (ICP) is. If there is significant repetitive feedback from clients within your ICP, then Client X’s requested changes are viable.
14. Your problem is you don’t believe in the product. (in response to internal product criticism)
When employees raise issues, some tend to blame them for not being on board or not drinking from kool-aid. Internal criticism should be heralded. A startup that doesn’t request criticism from its employees is likely to fail, especially if it’s for reasons like protecting a founder’s ego or because employees’ opinions are not valued. [Side note: Kool-aid drinking is not recommended because it’s generally filled with poison.]
Troubling Sentences About Your Operations and Marketing
15. Great, we’re done. Now, just run it through the approval process.
You’re probably too slow if you have to run a “done” feature through an approval process. Startups need to trust their employees more than enterprises. Employees can make mistakes, and they will, but startups can’t afford the time and expense of lengthy processes.
16. I don’t want problems, I want solutions.
This sentence is lazy manager-speak that destroys teamwork and suppresses innovation. It encourages someone who discovers a problem not to reveal it, leading to many issues later that should not have been a surprise. It’s pretty hard to create solutions when no one knows the problems, especially those in charge.
17. We’re going to go viral.
No one can predict whether a product (or even a meme) will go viral. There are many factors and mysteries that contribute to anything going viral. Any startup that claims it will go viral is simply demonstrating its ignorance. Going viral is absolutely not a business plan or strategy. If you hear anyone say this, consider the building on fire, and the alarm bells have rung.
18. Please like our Facebook page and tweet/repost our content.
Is your startup lazy and looking for shortcuts? Because when we hear a startup asking other people to do their marketing, that’s the red flag that flies. It would be best if you spent time creating good content that’s engaging, appropriate, and shareable. If you are doing that and still need to ask, your content is already failing at creating social engagement and needs reassessment.
19. We’ll write our own content.
Skimping on marketing is never a good strategy for a startup, especially when writing content. Asking overwhelmed developers to also write engaging, informative sales funnel or website content is not the way to go. Even if you find a few capable writers already on staff in other roles, your content will likely be too focused on your own solution and the market discourse around it. Hire a staff writer or an experienced content marketing agency, and leave the content writing to the professionals.
20. This will damage our brand.
You’re a startup, a new company that most people don’t even know exists. Even though you may have spent a bit of investor cash on a logo, website, and brand consulting, you don’t have a real brand to damage at this point. When your startup becomes successful, then it’s time to worry about consistently living up to your promises and maintaining the attractiveness of your products and business model.
21. We don’t get paid to do that./That’s not my job.
These troubling sentences are two variations on a theme that can kill a startup’s culture by destroying the shared belief that the company’s success is everybody’s responsibility. Startups are by nature lean, so they require an all-in mindset across the organization. If your startup has employees who won’t do their part to help the rising tide lift all boats, then you need to make some hard decisions about the makeup of your team.
Don’t Let Language Foul Up Your Startup
Startups can seem doomed to fail, but it doesn’t have to be that way. Many common issues that cause startups to go under are unforced errors, a case of the company or its team shooting themselves in the foot. Fortunately, most of these problems have clear warning signs that indicate a catastrophe might be on the horizon.
What’s more challenging is identifying the language and specific sentences that mean your startup is in trouble. Don’t let language foul up your startup. Be careful not to use these twenty-one sentences that could destroy your startup’s culture and help it fail, and if you hear them, take them as a warning that there’s an underlying issue to fix immediately.
If you want to ensure that your startup has a robust, data-driven marketing strategy that keeps you in business, give mvpGROW a call. We’re happy to discuss how our marketing department as a service approach and vast experience with startups will keep the lights on with high ROI engagement tactics that get results, not trouble.
The Founder & Chief Getting Sh%T Done Officer of mvpGrow. After about 8 years as a hired hand some of the largest (and smallest) B2B SaaS companies worldwide I decided to hang up my employee slippers and lace up my growth agency cleats. But just because I’m an agency doesn’t mean we can’t chat (no charge). Please email me on any topic and I will gladly reply: email@example.com