This post originally appeared at www.chrisamarks.com in 2014
It can be triggered by any number of things — something as benign as a re-forecasting exercise with your CFO, or something as direct as a conversation with a key customer. It can hit you suddenly, or it can evolve over time, from a lingering suspicion to a brutal certainty. Whatever the circumstances, almost every start-up founder experiences at least one true “Oh Shit” moment.
I’m not talking about the daily challenges faced by every entrepreneur. I’m not even talking about the occasional four alarm fires that come with the territory. I’m talking about the real deal. I’m talking about that moment when, quite literally, you realize that it isn’t going to work. The business proposition that you have been selling to your investors for months, no longer holds water. The core assumption underlying your financial model, is no longer true. Your product does not fit. Your customer will not pay. Your market is shrinking. Regardless of the cause, the result is the same: your worst fear…has become your new reality.
In my experience, it is in these moments that the fate of a start-up is often determined. It can either mark the beginning of the end, or an orchestrated march towards a new definition of success.
How do you make sure it is the latter? Well, it is never easy, but here are a few observations and suggestions:
- Don’t rationalize. You are not doing yourself, or your company, any favors by hiding from the truth. Numbers don’t lie, and you cannot convince your customers what they need. Your strategy is your strategy, until the day that it is not. Today is that day. Get over it, and move forward.
- Don’t wait until you have the answer. Recognizing the problem is just as important as finding the solution. Don’t waste any time worrying about how others will receive the news. Which leads to…
- Spread the word. Your employees are on the front lines. If you have come to this realization, then chances are, they are already there. Bring them into the conversation. Any new strategy is going to be met with some level of skepticism, but buy-in is important. Make your team feel like they own it.
- Move fast, but don’t be rash. Of course time matters. You are probably short on cash, and suddenly way behind plan. At the same time, try not to over-react. Any strategic shift will have many repercussions. Listen to all of your stakeholders. Empower them to talk. Make a plan. Test it with your customers. Then move forward. Quickly.
- Don’t view your investors as enemies. Sure they will be upset. So are you. But at the end of the day, you’re all in this together. Transparency in tough times will build new levels of trust. And who knows, they may just have some good ideas.
- Lead. In times of crisis, companies need leaders. It is important to clearly define the new vision of success, and to get everyone in the company aligned around it. Admitting there is a problem, owning your mistakes, and creating reasons for optimism among the chaos, will all help in the transition.
The term “pivot” has become so common in the start-up lexicon that it seems to have lost some of its meaning. The truth is, pivots are usually made out of necessity, and are almost always terrifying. Navigating these strategic shifts can be the key to your company’s success. So lean in, take it head on, and embrace your “Oh-Shit” moment.