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Startup Founders Are Often the Reason for Failure

Many people think that most startups fail because of a shortage of funds, and for some, this is true. But often there is a more complicated problem: the founder. In this article, we will address common startup issues that arise because of faulty leadership. 

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1. Dictatorial Leader Doesn’t Listen to the Team

Startup founders tend to be charismatic, ambitious and driven by their vision — all qualities needed to motivate people to buy in to their new business idea. Very often, it is the founder’s drive to make their idea a reality that makes a startup successful. But what happens when those qualities get taken to the extreme? Startup leaders who become dictatorial will set arbitrary goals and ignore team input, realistic time frames, technical challenges and costs to the detriment of the long-term success of the company. 

2. Advisors are Chosen for Reasons Other Than Experience or Expertise 

Many founders of startups surround themselves with friends rather than people who have expertise and experience in the field. They naturally gravitate toward similar personalities to their own and choose business partners who will not disagree with the direction they want to take the company. This means that when things start to go pear-shaped with the company, there is no one around to speak up and recommend a new direction. 

3. Planning Isn’t a Priority for the Founder 

Founders are often “idea” people. They get 50 ideas a day and are tempted to try at least 49 of them. This type of creative personality is excellent at coming up with ideas but, unfortunately, not great at making the ideas a reality. Why? Because developing an idea takes a great deal of planning and patience — and to make one idea work, the founder must give up the other 50 ideas they had that day. Startups that succeed usually have a creative ideas person who is backed by a highly organized team of people who excel at planning, making priorities and staying on course. 

4. Weekly Staff Meetings or Crisis Sessions?

Ideally, weekly staff meetings are a time to update the team on project statuses and plan for the next quarter. Instead, a dictatorial founder turns each meeting into a crisis session: What is going wrong? What could move faster? Why isn’t the project making more money? What should be an informative, calm meeting becomes an emotional deluge from the founder, which overwhelms the entire team.

5. The Founder Talks More Than They Listen

Successful startups have leaders who listen. A founder who always talks and gives their own opinion is a leader who is not learning from their team. These team members quickly become disgruntled because they feel unappreciated and undervalued.

6. The Leader Becomes Frustrated and Paranoid Over Time

When problems in the startup become too obvious to ignore, the founder may become more personal in their criticisms of staff members and advisors. Someone must be blamed, and since the leader won’t accept responsibility, then liability is passed to the staff. When this happens, staff commitment disintegrates, and people leave the company. Most who stay are only interested in collecting their paychecks. When this happens, the startup is destined for failure. 

Most founders begin their business with visions of being a great leader, but pressure, poor planning and limited resources can take its toll. If you’re reading this and recognize some of these traits in yourself, consider yourself lucky! Understanding your own strengths and weaknesses is a crucial first step to becoming a great leader.