The technology industry is considered to be a hot sector for business growth right now. In spite of the economy, private equity and venture capital firms are investing in technology start-ups extensively. In fact, lots of companies are in late-stage start-up phase – a.k.a. they’ve gotten several rounds of funding and are trying to establish themselves as a stabilized business entity that is prepared for fast growth. Unfortunately, some of these firms are in a “stalled growth mode.” This means, while they appear to be busy and thriving, they are really at a standstill (and maybe even sliding backwards). Here are 45 signs your technology start-up is in trouble. I’ve broken them down into major business areas:

Marketing

Your website content is not up-to-date. The “coming events” page lists things from four months ago and the “in the news” page has a press release from a year ago as its only item. Web page design is dated. The company still has the same ‘beta’ website design it had when the company first started. The website is static, and lacking any video presence and visuals to educate visitors. Blog has not been updated. The last blog post from six months ago. Blog stats indicate only two people have visited it in the last week. Management claims it’s too busy to develop an Authority Marketing platform to earn the trust of potential customers. Inconsistent use of social media. The management team never thinks to post items on Facebook, Twitter, and LinkedIn until well after they’ve happened. Managing the social media accounts is left for the interns to do. Not using social media. The company has set up accounts and publicly stopped using them. Nobody has the time or desire to keep them up. Management doesn’t see the value in paying anyone to use them. Unresolved questions from social media followers. Fans of the business posted questions on social media accounts looking for answers… and got nothing in response. When management was told, they said, “That’s the least of our worries.” Negative social media comments about your business. The business is under attack by unhappy customers and it’s not fighting back with answers to help them feel better. Why? Because nobody from the company is paying attention to the online reputation of the firm. Management just doesn’t see it as important enough to be a priority.

Product/Service Offering Development

Competitors have better and cheaper products. Employees are regularly hearing about competitors who are launching new products that have different/more/better features at a lower cost. When management is told, they say it would be too expensive to try to develop the same and believe they are still ahead in the market. No new revenue streams. The company is still working to perfect its first product without looking for additional ways to earn revenues with existing customers or a different potential market. Despite all of the customer requests for additional tools and features, management ignores the opportunities and says nothing else gets created until the initial product is where it should be. Your product has become a commodity. In the beginning, customers were happy to pay whatever price your company set. But now, they are calling to get a discount or deal and choosing to go with a competitor if they don’t get one. When management is informed of this, they say it’s the sales team’s department for not selling the value of the product well enough.

Leadership

Everyone’s constantly in meetings. Employees can’t find their boss because she is always in meetings. Employees complain of having to attend three meetings per day in addition to completing the eight hours of work they are required to get done independently. No one can make a decision without CEO’s okay. The CEO has the final say on everything from launching a new service to deciding which paperclips to purchase. Nobody dares to make a decision for fear of being fired on-the-spot. Employees are not being kept current on company’s progress. Employees find out their department is responsible for a new project after it’s been started. Employees are unaware when the company makes the news and only find out when their friends on the outside mention it to them. No board of directors or board advisors. The company is still being run by the three guys that founded it in a studio apartment. Instead of recognizing that a larger organization needs the expertise of people who have grown businesses, the founding members are convinced they can “figure it out as they go along;” even though they openly state how much they hate things like hiring, accounting, and sales. No clear business plan. The management team never discusses the company’s one, two, and five-year vision. There is regular talk of a need for significant growth, but never any mention of a step-by-step plan to get there. Management not listening to customers or employees. Customers are complaining and employees are sharing the complaints, but they soon give up trying to share the information because management’s reaction every time is that the customer is wrong and it’s not important. Management is leading, but no one is following. Management tells people what to do repeatedly, but the same mistakes keep getting made. When asked why it can’t be fixed, employees clam up and say nothing. No mission statement. Your management team has yet to put a clear vision summary together and share it with the entire team. This is a way to build a foundation of beliefs that all staff members can work off of in order to ensure they are in alignment with management’s mission for the organization.

Talent Development

No incentives to do anything, but ordinary work. Employees are being told to work more hours for the same pay. There are no rewards or recognition for innovation or creating something better. Employees are afraid to voice new ideas. Employees are scared to voice opinions or offer new ideas for fear of being yelled at or ignored. Company is constantly hiring and not promoting from within. Employees are being hired to close the gap in experience and knowledge because management doesn’t feel current employees are capable of stepping up and taking over bigger roles. Meetings have no agendas. Meetings are a free for all where nothing concrete is achieved. 9-5 work mentality. Employees only put in the required hours and rush out the door as soon as they can. High personnel turnover. Employees are leaving at a high rate, especially new employees. Pay structure not current. Employees are leaving because they can make twice as much money doing the same job for the competitor.

Sales and Customer Service

Over-promising and under-performing. Customers tell stories of unrealistic promises made by the sales team only to find out they’ve bought something that doesn’t work for them as they were told. You call and cannot get a live person, just a recording. Customers complain they can’t get anybody live on the phone during normal business hours. No one calls you back. Customers complain they’ve called more than once to get their problem resolved. You call and get put on hold. Customers complain of long wait times on hold. Losing customers. Customers cancel and stop taking calls from the sales team. Sales cycle increasing. It’s taking longer and longer to get a client to buy. Not using any CRM platform (i.e. Saleforce.com). Your company has no process for capturing data on prospects and clients, and is not leveraging that information to increase sales.

Financials

Sales per employee is decreasing. The average cost of an employee is not being covered by the total sales. A/P is larger than A/R. There are more bills then there are orders. Trying to do everything in-house (no outsourcing). The management team still thinks it should do its own accounting, HR, and office supply ordering. Not meeting budget. Enough said. Gross Profit % decreasing. It’s costing the company more to do the same transaction. Sales not growing. Sales are the same month after month. A/P is over 60 days. The company is paying vendors late because of lack of cash flow. A/R is over 30 days. Customers aren’t paying on time. Sales decreasing. New sales aren’t exceeding lost customers. Returns and refunds increasing. More dissatisfied users and returns from customers who tried the product and felt other options would better serve their needs. Negative working capital. No money to cover unexpected expenses. Insufficient financial controls. No checks and balances to ensure all purchases and investments are necessary and reasonable. No formal backup and recovery plan. Company data is at risk. Data is still being backed up using tape and is not on a schedule. Someone is taking the tapes home. The data has never been tested to see if it can be recovered.

Solution: Understand the #1 Fundamental of Business Growth

If your company is experiencing some of the signs above, then it’s vital your management team accept and embrace the #1 fundamental principal of business growth: New levels of achievement require new skills, information, and resources. In other words, getting your company out of a stalled growth pattern is going to require some outside assistance. There’s a reason big businesses have large advisory boards and management teams. They know a large business needs to be run differently. As your company moves out of late-stage start-up and into a stabilized business model with sustainable growth, it will need to let go of many of the very business approaches and beliefs that got it to where it is today. Trying to run your business like a start-up will only serve to hold it back from becoming the larger business it can be.

First Step = Seek Counsel from an Outside Party

For those reading this and realizing it’s time to make some changes, I suggest you first consult with an unbiased, outside party with whom you can share your situation honestly and without reservation. They will be able to help you identify the steps you can take to locate the talent, information, and resources you’ll need to move forward. Asking for help can be hard. Especially, for entrepreneurs, who by nature, like to do things for themselves. But, the best high-performers (i.e. pro athletes, CEOs of Fortune 500 companies, etc.), all have coaches. Your company should have one, too. Don’t let all the hard work your company and its employees have put into building your start-up result in a failed business. Instead, allow those with expertise in helping companies like yours through the growing pains of becoming a big business assist you. A sustainable business and bigger payout will be your reward! What did I miss? Share with me below what signs tell you the company is in a stalled growth mode, a.k.a trouble.

P.S. – Do you need an Outside Director, Advisory Board Member, Trusted Advisor,  or Interim CEO?  Someone who can help you see your business and your goals through “Fresh Eyes.”  Contact me and I will work with you to look at where you want to go and help you find the best way to get there.  Sometimes all it takes is someone with a fresh viewpoint, unencumbered by company politics or culture to help find the right solution.

Image from Arkady

Larry Putterman

Board Director | Advisory Board Member

Avoid painful lessons learned. Let me help solve your business problems. A fresh set of eyes can show you a different set of possibilities. Use my experience to save time and money. I have been there and done that. What makes me highly effective is my fresh viewpoint, unencumbered by company politics or culture.