I have been involved with startups for the last decade of my career. From scoping and building custom software at a high growth agency, to vetting new tech coming into a hospital, to my current role providing fractional strategic and tactical support, I’ve seen many good and bad decisions made by founders. Most people that start companies have a specific vision of a problem that can be changed by a business and earn money along the way. And while everyone brings their unique expertise to the proverbial startup table, if they are first time founders, they are bound to face similar struggles in building a company. I am hopeful that by sharing my bits of wisdom, I can encourage early stage CEOs to think critically about their actions and bring them closer to the success they desire.

Pitfall #1: Being Too Nice

One of my dad’s favorite bits of wisdom: “Nice people remember nice people.” This speaks to the fact that business and life are built upon relationships, and going out of your way to be civil, friendly, and supportive often comes back around in ways you don’t expect. I’ve seen this throughout my career! So founders, keep being a good person.

However, this can become a pitfall when CEOs are afraid to make hard decisions out of fear that someone won’t like them or that it will hurt their feelings. I’ve also witnessed this. A few examples: an employee isn’t the right fit for the organization and the founder won’t fire them; a services-based company accepts a work proposal for 50% of the value and ends up not being able to pay their staff; a board member offers the wrong advice and fear of upsetting the relationship causes the CEO to act upon it. Starting a company is super hard! But making hard choices, even if it is difficult is essential to strong leadership.

Pitfall #2: Shiny Object Syndrome

There are few things I think of that can sink a company faster than shiny object syndrome. Have you heard of this? What it boils down to is going after whatever you think is THE NEXT BIG THING. It could be adding an unresearched new feature for your software, building another resource-intensive service line, or paying for a flashy marketing campaign.

Growth is a good thing, right? How do you know if you are succumbing to shiny object syndrome? The shiny objects don’t support smart business decisions that serve your core mission and growth plan. This can be triggered by what competitors are doing. A good way to avoid the problem is by having open lines of honest communication with team members (no ‘yes’ people or echo chambers!) and conducting relevant research prior to pivots or expensive propositions that take you away from your ultimate goals and offerings.

Pitfall #3: Treating a Business Like a Group Project

It is common to start a company as a side hustle. You want to take time to grow a nest egg and see if the market responds. I get it. You may bring in a co-founder or someone to divide the labor while working other full time or part time jobs. I call this the Group Project Stage. However after 6-12 months, if you are gaining traction, it’s going to be time to stop side hustling and start acting like a real business. This means treating your company as your primary sources of income, your center of intellectual effort, and your day job.

To move from Group Project Stage to BIG GIRL Business Stage address brass tacks first:

• Hire a lawyer to set up your LLC and write your contracts (templates are a great starting point!)

• Open a business banking account - keep your personal and business funds separate

• Apply for a line of credit as needed

• Update your LinkedIn profile and social media to let the world know you are serious about this venture

• Set quarterly goals and plans to meet them (financial or otherwise)

• Hire someone to build a professional website. This is no place for amateur hour.

Starting a company is super hard! But making hard choices, even if it is difficult is essential to strong leadership.

Pitfall #4: Hiring Snafus

Not everyone needs to be a full time employee (FTE.) I believe that your CEO, COO, and tech team should be FTEs if you are building a product. However, in the earlier years, the smartest use of funds is fractional support by experts. It’s easy to fall into the “we have x number of FTEs so we are so successful” metric, but that’s a single measure. You also may not be able to afford top talent at first to work for you 40 hours a week. Unqualified hiring results in more time to do everything!

Finding fractional staff/ freelancer/ consultants (whatever you want to call it) allows someone that’s a professional to look at your business problems and goals and create a discrete plan to execute on those goals. A fractional Chief Financial Officer can do your monthly accounting and business projections at 25% time. A fractional Chief Marketing Office can establish your brand voice, strategize on your marketing plan for the year, focus on high value PR and content, and then outsource social media to a savvy Gen Zer and oversee the website build. Fractional agreements can last for a month or a year or anywhere in between, allowing for both parties to try each other out and only continue if the agreement serves everyone well. It’s a great way to explore talent!

Pitfall #5: Not Trusting Your People

Managing five people is not the same as managing twenty or one hundred. At the five people stage, everyone can have access to the CEO for sign off on decisions over Slack or email. By twenty people, systems need to be in place to triage the types of decisions that the CEO needs to make and what kinds of decisions others are empowered to make. By a hundred employees, you may need the dreaded “middle management” to screen requests, handle what needs to be handled, and take what needs to be taken to the top. This is one of the biggest growing pains I’ve seen for companies. CEOs are used to calling all the shots, but by not trusting their team to execute they cause themselves extreme stress, become bottlenecks, and frustrate their employees by not trusting them to do what they were hired for.

It’s normal to need to get used to different ways of managing your company and there are always growing pains. But trust and systems are essential to healthy growth. One bonus piece of advice— find community. It can be super lonely 😞 building a company and accelerators or professional teams or local startup communities can both ease the isolation and spark new ideas.

Trust and systems are essential to healthy growth. - Katie D. McMillan