What happens when things aren`t going your way for your startup?

When things aren't going your way as a founder, the struggle almost always comes down to one of three things: you don't have product-market fit, investors won't fund you, or good people keep leaving. None of these are unique to you, and each one is fixable. Every CEO has undergone tough times when they realize things aren't working out. What is not completely true is the feeling that usually comes with it, that you're alone and that this problem is yours alone.

Having dealt with all sorts of startups from both the inside and outside, from seed rounds to billion-dollar companies, I can confidently say this is a situation CEOs experience every once in a while. From board meetings to dinners with various CEOs, coaching sessions, and leadership retreats, I've heard similar problems from other startups time and time again. Here are some of the most common ones:

• I don't have product-market fit (PMF)

• I desperately need more money to run my company but investors don't want to give it to me

• Important people keep leaving my company

When you're experiencing one of these problems and you're unsure what to do, it's easy to feel stuck in a rut. But keep in mind that you are not alone, and many others have solved these same issues in their own companies. This article walks through the most common reasons behind these problems and how you can properly solve them inside your company.

I don't have PMF

If you don't manage to find product-market fit (PMF), then your startup is in trouble from the get-go. You may not have product-market fit if:

• You aren't growing

• You have high churn

• Your product is difficult to sell

• Customers aren't interested

This can leave you feeling stuck in the early stage of a startup: drawing up new product ideas, gaining no traction, then going back to the drawing board.

A second version of this is that you reached the middle stage because you did have PMF at some point, or at least believed you did, and then you scaled up your team. That can make it hard to ship, because you may have a lot of momentum behind a customer base or an idea that isn't really working anymore. It can be difficult to pivot what you're doing because of the public commitment you've already made to your employees, customers, investors, and, most importantly, yourself.

Pre-conditions on finding product-market fit

I won't get into how to find a proper product-market fit; there are already tons of great articles on that. Instead, I'll explain the necessary pre-conditions for finding PMF and what the usual blockers are:

Decide who your customer is

At times you'll have a hard time deciding who your primary customer is. Out of a fear of fully committing to one side, you try to please everyone, and you end up poorly serving everyone interested in your work. Only when you finally focus on selling to a specific customer base, and expand from there, will you truly find product-market fit.

Focus on that customer

It's easy to get distracted by new opportunities. For example, a customer base 10x larger than your existing one may show up with a huge revenue opportunity. But servicing that opportunity may require a ton of custom work. Do you take it? Many CEOs are tempted, but it won't help you serve the customer base you already decided to serve. In fact, it will hurt your ability to execute for your original customers.

Have a talk with that customer

Plenty of founders build what's on their mind and never bother to check their assumptions about the market. It's easy to pay lip service to 'talk to your customers' without actually doing it. You need to put yourself out there and talk with a few of your prospects and five of your actual customers, so you can see what you're currently serving and what you can do to improve. When talking to customers, learn what kind of people they are, what they care about, and what their needs are. This is the information that lets you focus on what they truly need. And this isn't a one-time thing; keep doing it to gauge how your customers' needs change as your service grows and improves.

A team who can execute a solution

Your team should be clearly better than the alternatives, on at least one important dimension. This is a step that gets ignored far too often. If the new customer base and new product require a certain kind of skill to build something great, you need those skills on hand. Too often, teams don't have the skills to execute on a complex product but refuse to admit it, until they run out of cash and die off.

I desperately need more money to run my company but investors don't want to give it to me

Finding the right investor and getting a meeting can be a challenge on its own, before you even try to convince them to invest. Feeling like you deserve the financing, and that it's unjust you aren't getting any, is a very common sentiment among founders struggling with this process.

Here's one thing to understand, though: no business deserves to be funded. Investment is amoral. Generally, no one truly cares how much work you've put into your startup, what your backstory is, or why you care about solving this problem. They mainly care about how strongly those things point to a hefty, fruitful investment opportunity.

If you're having a hard time convincing investors to hand money over, something is wrong with one or more of the following:

• The market

• The metrics

• The narrative

Validate your market

Investors want to put their money into large markets. The entire venture model is built on hunting for the home runs that deliver returns so massive they make every General Partner a billionaire. This may come off as unfair, but it doesn't change the economics of venture funds. Consider pitching the biggest idea into the largest market that you actually believe in.

If you're having a hard time convincing investors your market is big enough, they may not give you that feedback to your face. Backchanneling through mutual connections can be a much better way to get some authentic data.

If your market is genuinely small, maybe raising money isn't the right solution for you. I've seen founders refuse to accept how small their market's fundability is. In those cases, it's best to admit it to yourself and figure out a way to fund the business with revenue instead.

Identify your key metrics

Investors want to invest in good metrics. Which metrics matter comes down to the type of business you run. For a hardware business, bill-of-material cost, margin, customer acquisition cost, and revenue growth rate are often vital indicators of overall performance. For Software as a Service (SaaS), the metrics people focus on are usually acquisition cost, average customer value, churn, sales efficiency, and revenue growth. Consumer businesses mostly focus on daily active users and retention.

Regardless, every business is basically a spreadsheet that generates a cash-flow or profit number at the bottom. Investors are doing their best to pick the spreadsheets with the most profit and the lowest risk of the variables changing on them at the last moment. Most founders deny reality by claiming their business is different from everyone else's. It usually isn't.

Coming up with a compelling narrative

You need to tell a compelling story about why anyone should care about your business. Most founders tell a story that's either too complex or assumes too much effort from an investor to decode the jargon. Well-constructed stories are simple, powerful, and lead to a natural conclusion.

If your narrative doesn't work, you're relying on investors to work themselves to the bone to figure out whether your company is great. Unfortunately, most won't bother.

Important people keep leaving my company

If good people keep deciding to go to business school after realizing they don't want to work at a startup, or keep going back to their old jobs, it may be for one of these reasons:

• You haven't created clear career paths for people

• You haven't defined the purpose or the mission

Promote career development

Founders tend to forget this, but people do care about their careers. It's easy to overlook when it feels like there are existential issues on the line every day.

After your startup grows to a certain size, people really start to care about their opportunities and where working at your company will land them career-wise. To handle this, implement a leveling system sooner rather than later. Also create a performance review system and a skills grid that spells out what each person needs to achieve or demonstrate at every level to move up. This makes it much easier for your team to know what they need to do to advance their career at your company.

Company's mission

Your staff needs a reason to get out of bed and show up every day. Paying rent is fine, but if that's the only reason, then as soon as someone shows up with a bigger wad of cash, they'll leave to grab it.

Some companies start with a mission-oriented founder and a clear purpose, and some launch by accident. If you're in the latter camp (and even if you're in the former), take the time to think about what your company's purpose is and whether it's attractive to the right pool of talent. Culture-minded professionals weigh your mission when deciding whether to join, so it's worth thinking about carefully.

Once you have a mission that fits, communicate it well. However much you think you're communicating it, it's probably not enough. It's also crucial to connect what rank-and-file employees do back to the mission, so they know their work has a purpose behind it.

Conclusion

Everyone has their own set of problems, and founders are no exception. Any founder out there has problems to deal with, and they're likely similar to yours. Look for places where founders like you meet to work through the same situations you're all going through.

Frequently asked questions

How do I know if my startup doesn't have product-market fit?

The common signs are that you aren't growing, churn is high, your product is hard to sell, and customers just aren't interested. If you keep cycling through new product ideas without gaining traction, you likely haven't found product-market fit yet and need to narrow your focus to one clear customer.

Why won't investors fund my startup?

When investors pass, the problem is usually your market, your metrics, or your narrative. Investors back large markets, strong numbers, and a simple, compelling story. If your market is small or your metrics are weak, no amount of effort spent explaining your backstory will change their decision.

How do I stop key employees from leaving my startup?

People leave when there's no clear career path and no compelling mission. Put a leveling system, performance reviews, and a skills grid in place so employees can see how to advance. Then define your mission clearly and connect each person's work to it, so they know their effort matters.

Is it normal to feel like my startup is failing?

Yes. Almost every founder hits stretches where things aren't working, whether it's product-market fit, fundraising, or losing good people. These struggles are common and solvable. The useful move is to find communities where other founders meet and work through the same problems you're facing.