Don't Fake It Till You Make It — Become It Tips on exploring where your startup could be exposed to the greatest risk.
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What if you fail, but what if you fly?
Fear of failure is the thought that keeps every entrepreneur awake at night. All the time, energy and investment could be for nothing if the idea or delivery isn't successful.
For many of us, the thought of going back to an older version of ourselves isn't an option anymore. I could personally never be an employee again. Mentally and physically, my mind and body would revolt. The freedom and passion that come with the grit and grind of entrepreneurship are my motivators to wake up everyday and keep this machine going.
This all sounds idealistic and wonderful, but what happens when you are in the midst of it all — the building, planning, sourcing, scaling — and the pressure becomes palpable? How do you handle the toll of decision-making in those moments when fight-or-flight kicks in? Everything we do in business today is magnified because of social media and the rapid speed with which information is shared to create buzz and interest. It truly is a catch-22, particularly if you find yourself on the premature side of information delivery.
Ask yourself: What would you do to keep your business running or to get it off the ground? Would you fake until you made it, or do you understand how this mentality can actually be the weapon that tears down everything you sought to build? As an entrepreneur and as a consultant who acts as a trusted advisor for many startups and scaling businesses, I wanted to share three areas within your business to pay close attention to and ensure you're not getting too close to the danger zone of faking it.
Related: 5 Myths That May Be Causing Your Startup to Stall
Financial reporting
If you find yourself preparing for a round of funding and looking for ways to "improve" the financial outlook, this is an indicator that you need to take a step back. The rules to be adhered to seldom leave room for interpretation; guidance and controls are strong. To protect yourself, do the following: Ensure you or your trusted advisor can distill your accounting policies and assumptions so that they're clearly defined and explainable. Plus, have your validation basis ready, along with supporting documentation.
Finance and accounting are a gap area for many entrepreneurs, which makes bringing someone onboard who can be your trusted advisor even more important. Not understanding the complexities isn't an excuse that will hold up in court.
Hyper-growth
There is such a thing as growing too fast. even though growth is all we ever hear about. So why is this potentially a problem indicator? Because you can't always keep up. If your business grows at a faster clip than your internal foundations can handle, stress and internal constraints can easily follow. This creates an environment where people don't have the time to do their due diligence, put controls in place to validate results or complete full 360-degree reviews of technology. Some key indicators to look out for include:
- High turnover due to employee burnout and dissatisfaction.
Quality-control issues.
Large downturns in customer feedback.
Bleeding money by enabling bandaids versus solutions (i.e. sprint-versus-marathon mentality).
Have people in place who bring you the bad news, and be ready to hear it and take it to heart without offense. I often have to tell people what's not working, and it isn't easy to say and even harder to hear. But having yes people in your corner won't allow for the learning and changes needed to be successful.
Related: 3 Leadership Secrets Every Successful Startup CEO Knows
Tangibles vs. intangibles
This is a big shift that's taken place in business over the past decade. Within the accounting community, we've been discussing this for quite some time and continue to build a framework for valuation and controls for financial reporting.
Why does this matter? The volume of trends in financial reporting (customer lists, email lists, follower counts, service contracts, crypto, NFTs, et al) have multiplied over the past decade. The issue being that the valuation basis for intangible assets can be rather subjective. If your valuation basis is way off, you could easily find yourself on the wrong side of a massive write-off that could be detrimental to your financial position. How well would that look to your current or prospective investors? Not well.
All the moving parts of a business serve its greater good. It's critical we get out of our silos and realize we can't just be sales people, numbers people or [roduct people. We have to understand it all, because when we sell our business to investors, we're selling the whole operation — not just the product or service in a vacuum.
Some of the most recent scandals to hit the entrepreneur community (WeWork and Theranos, for two) reveal just how quickly a lie or omission can snowball into a larger problem. Being a strong advocate for your business and ensuring that you're in the center of all decision-making processes will give you the comprehensive authority you need to successfully walk the fine line between faking it and making it. The devil really is in the details.
