The Biggest Problem With Outside Funding

The Biggest Problem With Outside Funding

Credit: Getty Images.

 

Don’t lose focus on what brought you to where you are.

The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What are some tips for maintaining a successful startup?” is written by William Vanderbloemen, founder and CEO of Vanderbloemen Search Group.

While maintaining a successful startup is extremely challenging (and rare), there is good news for those entrepreneurs who have had at least some measure of success early on. The most important piece is that you have found a product or service that works well and helps the market in creative and useful ways, proof that it’s not simply left to luck.

By applying these three tips, you can strategically set your business up for lengthy and sustainable success:

  1. Beware of “shiny object syndrome”

Don’t lose focus on what has brought you to where you are. Often, the very thing that makes an entrepreneur gifted enough to spot an opportunity and run with it can lead to an overextension of time, money, and resources.

A great entrepreneurial spirit has a shadow side, and I call it SOS: “shiny object syndrome.” Too often, businesses start out great, but try to expand offerings in a number of directions that do not align with the business’ core offering.

I experienced this firsthand in the early days of starting Vanderbloemen Search Group. Early on, we were asked to expand our offerings to include vision consulting, and because it was a fascinating opportunity, we looked into it. We were also asked to do real estate mergers for large churches, which piqued my curiosity. But thanks to some wise direction from a consultant, we drilled down on the singular focus of helping churches build great teams. Having that singular focus has acted as an anchor for us and our vision as we’ve grown.

  1. Keep the duct tape

Don’t overspend, particularly on office overhead. The beauty of startups is that everyone who helps at the start is, as I say, “really good with duct tape.” But once you experience a little success and that all-hands-on-deck spirit is gone, things can easily become bloated.

Even as I’m writing this, I’m a little afraid of losing this “duct tape spirit” of our company because we’re moving into a new office. This is our third space (we started in an old, crowded house on the edge of Rice University’s campus), and once again we are out of room. But going forward, every new hire will only know the nice, new office—not the days of the broom closet that we turned into a makeshift podcast recording booth. While the actual need for an all-hands-on-deck approach will shrink as your company grows, fight to keep the “duct tape spirit” alive on your team.

  1. Protect your soul

Be extremely careful when considering outside funding. Some industries, like software solutions, require a quick turnaround from startup to market. That usually only comes with outside investors. However, the moment you take money from outsiders is the moment you go from being the founder to being someone who can be fired.

 

I’ve heard countless stories of companies that took money to be “a small part of something big.” While that is the right move to make sometimes, if your business (like ours) is driven by a cause, make sure that anyone who is granted voting control is also driven by your cause and not by a bottom line. I’ve seen too many companies (and too many episodes of Silicon Valley) where a founder ends up getting kicked out or a company loses its soul, all in the name of expansion.

If you’ve found success in your startup, then you can be confident in what service your company provides. From there, the name of the game is just good decision-making.

[Fortune]

May 2, 2016 / by / in , , , , ,

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