7 Ways to Fail and How To Prevent Them From Happening To You: Part One

Failure to Not Have Enough Investment Dollars

Cash is king and it really is true. Too many companies start out on the premise that "we will really not need that much cash." This thinking comes from people that have never done a startup or if they have it was not as large as the one they are embarking on. Always get a little more cash then you need to cushion what I call the “Expected Unexpected”. No mater if you or someone you work with has a Harvard MBA and an ability to close the most jaded potential customer, having extra cash always makes good sense. Research tells us that 93% of the first several years of initial sales projections fail to materialize based on expected timelines. And this means your cash will take a hit and it could be a big hit. Especially based on other factors like current receivable collections and cost controls. Remember, if you want to launch a company, plan for the "Expected Unexpected" and always get a little more cash then you need or you might end up regretting it when performing a post mortem assessment of where you went wrong.

Failure To Not Consider The Worst Case

My dad, who is a famous brain surgeon based in Northern California, taught me when I was 15 to always look at the worst case. Before he would operate on a patient, he considers the unique facts of each patient and the potential worst case scenarios that can occur from a each surgical procedure. He does it for two reasons. One, he wants to make sure he does everything he can to prevent the worst from happening, and two, to have a plan in place to deal with the worst case scenarios if they occur.

If you are starting a company, consider the worst case and then consider all the contingent ways of dealing with the worst case. Then consider the implications of any contingent plans that you may put into play which prevent the worst case from happening. I always counsel our clients both during the development of their strategic plans and once their company gets funded to continue to consider the worst case and plan for how to not have it occur -- as well as dealing with it if it does.

Article written by FundedPlans Founder and CEO, Mr. Schiffer