5 Steps to Failure-Proof Your Startup

One of the lessons of the global pandemic is that you can never predict how external events are going to impact your business. No one saw worldwide lockdowns coming. Nothing like it had never happened in the modern business age. So how do you prepare for a crisis like that? And what about the next one?

There were obvious winners during the lockdowns. These were the companies that were naturally predisposed for growth once the world was forced to stay put at home – companies like Amazon, Zoom, Netflix, and DoorDash.

But there were also companies that bore the full brunt of the collapse of their business due to the lockdowns and were not only prepared to survive, but thrive.

They did so by following strategies that they had already woven into the fabric of their business even before the pandemic emerged as a threat.

Our company, Get Spiffy, is a startup that provides mobile, on-demand vehicle care and maintenance at your home, your office, and for fleets like rental car companies. For us, the pandemic lockdowns weren’t at opportunity at all, but rather a perfect storm. No one was driving their cars, no one was commuting, no one was traveling.

However, even with all of that working against us, what we had working for us was an experienced management team that had previously taken various startups through various external crises. Leveraging that experience, we had already installed a failure-proofing strategy into our company DNA.

Look, no startup can be 100 percent failure-proof, and no strategy is 100 percent foolproof. But here are five steps to follow that will put your startup in its best position to survive and thrive – both in bad times and in good.

1. Satisfy your customers, to a point.

Yes, you want 100 percent happy customers all the time. But some startups target 100 percent customer satisfaction by trying to be all things to all customers while chasing growth at all costs. That strategy isn’t sustainable, nor will it survive a crisis.

Growth at all costs is unchecked growth, which can’t be controlled. When a crisis hits, that lack of control will impact your startup both economically and internally, when all those new customers need a lot more care than your company has the capacity to give them. This always leads to customer churn and employee strife.

Lean on customer feedback and organic growth to keep growth steady and at high margins. To keep your growth organic, don’t go all-in on one product model, customer profile, or market segment. Instead, solicit customer feedback, listen to them, then experiment and expand your value proposition with more high-margin, high-value offerings.

A case in point: I was initially surprised by how my current CEO at Spiffy allowed for more room to fail during experimentation. But I learned that what he was doing was failing small in order to prevent failing big, like a controlled burn in a forest to prevent future wildfires.

2. Become sales driven, but not right away.

Once you’ve set acceptable customer satisfaction levels, but not before, build a formal sales process around those customer profiles. 

The mistake I see here is when a company over-hires into their sales team too early. That team then utilizes an arsenal of different sales strategies, techniques, methods – and even  offerings – to see what sticks. This usually ends up resulting in misaligned customer expectations and low sales productivity. 

This is something I learned at my last startup, Automated Insights, which uses natural language generation to produce content from raw data. We spent a ton of time trying to sell any customer every kind of automated content we thought they might need. It was only after a multitude of failed sales that we took the time to home in on what kind of automated content sold quickest to the most customers and produced the best results.  

The lesson here is that when you don’t know why something works, like a sales process, you don’t have any assurance that it will continue to work when you need it to. A startup must, at some point, accelerate sales to succeed, but if you accelerate before you document the process, fortify what works, hire the right people to execute those plans, and automate wherever possible, you’re setting yourself up for future failure.

3. Get obsessive about profitability without stifling innovation.

Often, the move to a sales-driven organization winds up succeeding at the expense of innovation, but it doesn’t have to be that way.

Innovation isn’t just about finding new solutions to old problems and building those solutions into the products. Innovation is also about finding new ways to make those products more successful and, eventually, more profitable. 

Turn your innovation team on to reducing waste, reducing costs, increasing value, automating repeated tasks, and filtering out bad customers. Use a less-is-more approach to create a better customer experience by cutting functionality instead of adding it.

When this approach to innovation is already a part of your operational model, it becomes second nature when it’s necessary, like when a crisis hits. At Spiffy, we started to obsess about profitability about six months before the pandemic hit. And when it did, we turned our innovation team, along with almost everyone else at the company, into a survival team.

4. Become a necessity, not a nice-to-have.

When times of crisis hit, every consumer and business has to make decisions about where cuts are going to be made. Don’t be one of those cuts.

Evolving your customer’s perception of your product from nice-to-have to must-have isn’t just failure-prevention, it’s the primary strategy for scale and growth. Any company can sell a product at random. The companies that survive and thrive are constantly finding ways to become a necessity.

Becoming a must-have doesn’t happen by accident. It’s strategically built into the value-proposition of the product itself. It’s also built into the company. Don’t just be the product your customers need, be the company that all your employees would never leave.

One of the startups I advise is a building software to change how companies find and hire talent by focusing primarily on employee fit, skills over experience, and careers, rather than jobs. As the lockdowns began to lift, this startup found itself tempted by a huge opportunity, as so many companies now face challenges hiring anyone, not just the best fit.

Rather than capitalize on the massive wave of job-shifters, the startup decided to remain focused on its original mission, and stick with its model of fit-first hiring, rather than help just any company hire just any employee. It’s betting that when the dust settles and the jobs market returns to normal, it will be a new normal, and it will be the must-have leader instead of just another nice-to-have also-ran.

5. Always innovate, but choose wisely.

It’s no secret that the startups that thrive are always innovating. But there comes a point when bad bets can add up and can become a financial drain. The dustbin of startup history is full of companies who were successful but then pivoted the wrong way for no good reason and never recovered.

Right before the pandemic, Spiffy made the decision to make a big bet on the fleet business, mainly rental cars. But we didn’t pivot and give up our existing residential business, which would have been a much easier path and a more profitable move. Instead, we used every ounce of innovation we could to find ways to use the same res to serve two disparate markets.

When the pandemic hit, fleets all but disappeared, and the residential business, combined with a solid disinfection program, is what got us through. As fleets recover, we now enjoy two strong lines of business, all served by the same platforms and people.

Never rest on your success, but don’t ever fix that which isn’t broken. You should always be thinking about innovation, but be careful what you give up to get there, because you need to be able to go to the mattresses when a crisis hits.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.