By Mark Flickinger, Forbes Contributor
Creating a startup business is a lot like building a house. You can have high-quality materials and the most skilled laborers, but if things aren’t done in the right order, or you try to skip a step, you’ll end up with a shoddy structure that won’t stand the test of time. Imagine putting in the drywall before you’ve installed the plumbing; that mistake will cost time and money, and could torpedo the project before the “for sale” sign ever goes up.
If you want to create a startup with little chance for success, these are the operational missteps to ensure your eventual failure:
1. Focus On Sales Before Nailing The Product
Consider the high-tech sector: A couple of founders have an idea and then spend some time coding software until they come up with a minimum viable product, or MVP. The process of creation is exciting, and the founders rush to get their brainchild to market to see if someone will buy it. Lo and behold, there are some initial sales. Elated, the founders immediately invest in a salesforce.
What happens then? Will the MVP carry the day, delivering on the promise those founders sold to their early customers? Of course not. They have skipped product feedback and refinement, marketing, and customer success. They have failed to ask and answer the right questions in their clamor to release the product and grow sales.
During this early time in a product’s history, startups need to refrain from pouring fuel on the fire too soon. Ask what other features and functionality the product needs to separate it from the competition. Refine both the product and the go-to-market strategy to ensure sustainable growth.
You may quickly get those first contracts, but if you don’t move the product forward from its MVP status, you may find out that it doesn’t measure up when renewal time comes. If you’ve invested heavily in sales, the double whammy of increased expense and churning revenue can put a business into a death spiral.
2. Make Customer Success A “Nice to Have,” Not A “Must Have”
Too many young companies invest in customer success much later than they should. They instead focus on customer acquisition through sales and marketing instead of ensuring their first customers’ satisfaction. It’s hard for startups to get out of that mindset, since it seems logical to think that the more customers you have, the more revenue you can show, and the more funding you’ll receive from investors.
What startups often don’t understand is the value of taking care of and mining their existing customer base. It can cost 5 times more to attract a new customer than it does to retain an existing one. Upselling to existing customers who have had a good experience with your business is easier and cheaper than starting from scratch.
Not to mention, keeping close to your customers is a vital way to gain feedback about your product to ensure you’re still hitting the bullseye in terms of problem resolution and functionality. Without customers’ opinions, you’re simply developing the product in a vacuum, without any real understanding of what they want.
As soon as startups have a viable product and start gaining customers, having someone in charge of customer success—and holding that function of the business accountable through key metrics and KPIs—is as important as sales and marketing programs, maybe more so.
Organizations that excel at the customer experience grow revenues 4-8% above their market. Conversely, companies that fail to instill customer success as a way of doing business can suffer from a vicious cycle of costly customer acquisition and loss.
3. Treat Employees As If They’re Easily Replaceable
I’ve talked before about the importance of hiring the right people with the right skillsets to support your business. If you don’t build the right team to run and grow it from the outset, you’re simply not going to get to where you want to be. This is also why it’s important not to treat your team as a collection of interchangeable parts that are easily replaceable.
Startups take a lot of time, effort, and commitment to become successful. If your team doesn’t feel appreciated and valued, they are not going to have the dedication or work ethic required to scale your business effectively.
Showing appreciation goes beyond a paycheck. Business leaders need to ensure that team members understand and share a common goal for growing your company. Team members also need to see a path for their own professional growth. Just as they are growing in experience and skillsets, they also need to be able to envision their role progression as the business matures.
Leaders who fail to value and nurture their team will end up with a “leaky bucket” that’s constantly having to be refilled. More time will be spent on looking for and hiring new talent to replace the previous talent than building and growing the business.
Blueprint For Success
These aforementioned mistakes are the ones I often see startup founders make when they focus on growing too fast or are growing without a well thought out business strategy. To go back to the analogy of building a house, entrepreneurs need to start with a solid blueprint that details not only their plans for growth, but also the proper order in which to execute them.
Putting sales and marketing before product refinement, not paying attention to customer satisfaction and retention, and the inability to retain employees can all thwart a company’s chances. Make sure your startup isn’t guilty of these three common obstacles to success.
The article was originally published in Forbes and reprinted with permission.