Chapter 2: Early Struggle
In this chapter, we look at the most dangerous of the stages, Early Struggle. Eighty percent of new ventures never make it out of Early Struggle.
The only strategy one should have for this stage is to get out of it as quickly as possible.
How can you do that?
By asking yourself every single day, “What did I do to bring us closer to finding a profitable/sustainable market?”
There are three key steps to getting out of Early Struggle:
- Maximize your access to external funding – whatever your business plan says you need, triple it.
- Minimize the path to a viable market by – listening, to find out where your customers are; experimenting, to determine what it is that the market wants; and adapting, your initial decisions were made in a vacuum, it’s important to adjust based on real-world findings.
- Connect to your market in the shortest distance possible – avoid wasting money on fancy offices and premature branding. Ensure every dollar you spend brings you closer to finding a viable market for your product or service.
Although it can vary widely, organizations typically spend three years on average in Early Struggle.
Please use the links below to click through the resources for Chapter 2.
Not only will we take a closer look at what it means to be in Early Struggle, we’ve also included some tools to help you navigate this difficult stage.
Chapter 2 Resources
Blog Post: The 3 Fundamentals of Startup Success
Why is it that 80% of businesses don’t make it out of Early Struggle? In this blog post, Les uncovers three distinct areas that most founders miss. He also provides specific tips on how to keep them from sidelining your organization.
Article: Should You Say No to Start-up Funding?
This article from Les on American Express’ Open Forum shows why an infusion of outside capital can sometimes do much more harm than good to a fledging startup. Learn the key question one should ask before taking this step.
Avoiding the Artisan Trap
When an organization is led by a Visionary/Operator who can easily switch between these two roles, there’s a danger of falling victim to the Artisan Trap.
What happens is, during Early Struggle this leader uses their charismatic, passionate Visionary side to bring in sales.
However, once the orders begin piling up, this person switches to Operator mode and begins preparing/delivering what’s been sold. The problem is, while they are doing this, sales stall because they’re no longer out there selling.
It becomes a vicious cycle of selling and delivering that prevents the business from growing.
The solution? The Visionary needs to surround him/herself with first one, then a team of Operators. This way, the Visionary can continue to bring in sales while the Operators make sure that the customers’ needs are fulfilled.
Often when an organization is toggling back and forth between Late Early Struggle and Early Fun, the Artisan Trap is to blame.
Read more about the Artisan Trap in this blog post.
Want to know whether you’re a Visionary, an Operator, or perhaps another leadership style? Find out by taking our quiz here!
Interview: Gregg Pollack
In this interview, Envy Labs founder Gregg Pollack shares the valuable lessons he learned while taking his company through Early Struggle and into Fun. From the importance of managing cash flow and how he did so, to finding the right people and learning the best way to delegate. You’ll also hear the top three things he would tell someone who is starting a new business today.
Tool: Identifying Your Market
Do you need help pinpointing the profitable, sustainable market that is best for you to pursue?
Book Yourself Solid by Michael Port is a perfect place to start! This book contains tips that will help you identify your ideal clients, as well as how to pursue them.
We typically don’t make many recommendations when it comes to outside resources. However, there are a few exceptions, and Michael Port is one of them. While we do not derive any financial benefit from this, Michael is a friend of Predictable Success.
Tool: CRM Resource
Early Struggle is not a time to be focusing on systems and processes. However, there are some that an organization shouldn’t be without, and a Customer Relationship Management system is one of them.
As the business expands, the Visionary will need to be able to relinquish this responsibility to one or more Operator(s).
Here are two CRM providers you may want to check out:
ToOL: The Early Struggle Dashboard
During Early Struggle, keeping track of cash flow is essential. However, many founder/owners tend to numb the numbers down. One of the ways they do this is by is neglecting to include a salary for themselves in the figures.
There may be some months where a founder/owner won’t collect a salary, but this cannot go on indefinitely. In order to obtain a true picture of how the business is doing, this expense must be included and at the true market rate.
The second main way that founder/owners numb the numbers is by including projected income in their analysis.
As you can see from the spreadsheets below, this makes a drastic difference in the bottom line. The only income that should ever be included on the cash flow spreadsheet is the income that has been already been invoiced for.
If you truly want to make it through Early Struggle, keep your cash flow sheet front in center. Make it your screensaver, so you will see it every day.
Be sure it’s accurate and let it inspire you to fight through this most challenging stage.
Want additional tips on tracking your organization’s financials during Early Struggle? Learn more in our Online Course - "Getting out of Early Struggle and into Fun".