You wouldn't start a business if you didn't think it could work. Yes, entrepreneurs tend to have an outsized sense of the possible, no one would put in the time, money and effort required to start a business without a compelling sense that it could really become a success. Why, then, do so many startups fail?
One big reason is because entrepreneurs aren't known for listening and learning from their mistakes. When everything seems to be falling down around you, there's a fine line between blindly sticking to your original plan and being open to pausing, analyzing what went wrong, and making course corrections with the benefit of your recent experience and new information. Ending up on the correct side of this line can be the difference between failure and success.
Mistakes are inevitable, especially in a startup where so many factors must come together simultaneously. It is almost as inevitable that an entrepreneur will become overextended during the startup phase. Every entrepreneur has war stories of the chainsaw juggling that's inherent in the first few years of a company's existence.
No Room for Error
Our war story starts when we hit our stride and were maturing as an organization. We were growing at a rapid clip, were 100 percent staffed with our strategy consulting business, and had just doubled our associate class. We were fully extended financially and had more than doubled our team; we had no room for error.
Our business can be spikey and, as bad luck would have it, two of our biggest clients had a change in their business that reduced the need for our support. We had to cut our cost structure fast and deep to get it in line with the new forecasted revenue base.