Why Startups Fail

Quick Insight

Conflict around money management usually come from a difference in assumptions and goals. Start there. Once you agree on that, see if you still disagree on what that means for how to manage the money.

In The founder's Dilemmas, Noam Wasserman claims that 65% of startups fail due to co-founder conflict in terms of:

money management styles
personality styles, and
conflict resolution approaches

All company owners likely struggle with the same conflict. What can you do about it?

I was recently co-author in a Journal of Financial Therapy article titled "Integrating Financial Therapy within Family-Owned Businesses: A Theoretical Case Vignette with Recommended Strategies for Consulting with Copreneurs”. Yes, that title is crazy long but it sounds cool to the readers of the Journal of Financial Therapy. Here are a couple of ideas from the article that can help your business and business relationships.

One problem is that we often aren’t aware of our attitudes and actions around money. In the article, we talk about money scripts, which are unconscious beliefs around money that shape our behavior around finances, money management, and financial goals.
Put simply, owners may have completely different and unspoken ideas on how to manage the company’s money. It means different things to different people.

Many differences in strategy come from a difference in assumptions and goals. Make assumptions explicit by identifying and communicating the unspoken and unconscious. Start there. One practical way to do this is through a strategic planning process. Another is for owners to get at their ultimate goals for their life and company. Once this is known, owners can forge a common purpose and strategy for a company.

There’s a saying that the decisions are easy when the vision is clear. Agreement on the purpose and vision of your strategy means less conflict between owners in day-to-day management.

- Rob Stephens

Further Insight

Read the Journal of Financial Therapy article "Integrating Financial Therapy within Family-Owned Businesses: A Theoretical Case Vignette with Recommended Strategies for Consulting with Copreneurs”.
Video: Couples With Companies - In business, it’s always about relationships. This is especially true when your life partner is also your business partner. How can you forge a common vision for your shared life and company? How can you better understand your personal needs and goals for the business? You'll explore these questions with practical steps to help your business and relationship thrive.
Course: Entrepreneurial Finance - Small Business Financial Management Basics - Get a financial overview of the entrepreneurial journey from startup to operational decisions to exit planning. You’ll hear from a business banker guest speaker who explains what lenders look at when deciding whether to make a loan to a small business.

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