Why Startups fail? The Bad Leadership Problem at 3 Steps.

Why Startups fail? The Bad Leadership Problem at 3 Steps.

One of the Top 10 reasons about “Why do startups fail?” is “The poor leadership problem” or it also known as “The bad leadership problem”.

What is important to understand?

1. How does poor leadership impact on the startups?

One of the main reasons an employee leaves a company is because of his or her direct manager.

This kind of problem also affects corporate companies. However, the impact of this problem is much bigger at startups than corporations. So, how does this problem impact on the startups?

  • Lack of Stability. The poor leadership problem kills the stability at teams.
  • Direct impact on sales and partnerships. In the short and medium term, it makes a direct impact on some deals and some partners. After some key salespeople leave, the activity at the local country is going to go down and some partners stop the cooperation.
  • Bad reputation. It also creates bad company reputation at the market and customers. Once you have this, it may take years to have a good one again.
  • As a consequence of all the previous one, it creates financial problems, technical development issues, and some startups fail because of the poor leadership problem.

However, if you are reading this and you are at a management position. This article will help to be more aware of the mistakes to avoid and how to become a better leader.

First of all, let’s start about what is the difference between management and leadership. Many people confuse the terms management and leadership. Therefore, they can’t ever be a good leader, if you don’t have clear these differences.

2. What mistakes should you stop?

 “We spend a lot of time teaching leaders what to do. We do not spend enough time teaching leaders what to stop.” –  Marshall Goldsmith at What Got You Here Won’t Get You There. 

Now, these concepts are more clear, let’s pass of what mistakes are done by poor leadership. It means, managers without leadership skills.

2.1 Top 12 deadly mistakes by managers without leadership skills.

  1. General distrust in employees about employee’s time management, tasks, skills, and expertise.
  2. Fear of delegating. Many CEOs and management are afraid of delegating because of two main reasons. First, distrust the expertise of their own employees and second they are not able to distinguish which tasks should be delegated and which one not.
  3. Excess of delegating. Once again the self-trust to the employees is a key. Many managers are lazy and they give abuse the delegation to their employees giving even their own tasks.
  4. Micromanagement through a large number of reports. Besides the previously mentioned points, it is very common to try to control everything through micromanagement. I also would like to add that this is one of the situations that most kill the motivation of employees, especially if you are working in sales.
  5. Negativity. Spreading and making a negative environment or be pessimistic through a focus on failures and not focus on the positive points.
  6. Not keep the promises. Relationships are based on mutual trust and not fulfilling promises can mean killing the relationship and motivation between managers and employees.
  7. Unwilling to admit the own mistakes. As a result, employees feel frustrated and again discouraged.
  8. Not listen their employees. The majority of employees are giving signs and tracks to their management before they quit their jobs. Sometimes, these signs are direct and other times it is necessary to understand as far as they are not clear. Not pay attention or not listen to them, it is a standard of management with poor leadership.
  9. Not understand the personal motivations of each employee. Each person has their own personal motivations. Understanding and fitting them into the group according to each person is a very difficult task but paid with motivated, efficient and long-term employees.
  10. Play favoritism. The “bad bosses” tend to reward and like those who treat him as “gods or masters”. As a consequence, the most efficient employees end up changing companies and the least efficient ones remain there. The reason is due to their rates performance depends on how they treat the manager and not by real results. This tendency is sometimes caused by personal complexes where managers take advantage of the power to pay for abuse in personal or past lives situations.
  11. The way of rewarding the low and high performance by tasks and salary. From one hand, allow low performances or lack of rewarding the most performance workers. “A chain is as weak as its weakest piece.” On the other hand, the way to reward those employees who are more efficient in time and results. Instead of rewarding them with free time, they reward themselves with more tasks and more work. In this way, an efficient employee ends up working demotivated by what sooner or later will look for a company where his good performance is better rewarded. In this part also include the part of wages, as part of the way to compensate and recognize the performance of employees.
  12. Ask for results without giving the right tools. When the annual KPIs are agreed, the objectives requested are relative to the tools and resources available from the employees. For example, if you work in sales and ask for 100 k € from 0, then it would be fair to have a marketing budget according to that 100 k €. Depending on each industry that amount will be higher or lower.

2.2 Top 10 soft mistakes by managers without leadership skills.

To complete the list I have added another 10 softer errors to consider.

  1. Make to waste time in useless tasks or forget about the requested one to the employees.
  2. Conduct meetings on a regular basis that do not add any value.
  3. Not respecting employees’ personal time, including vacations.
  4. Expect the same effort on the part of the employees as you do as an entrepreneur.
  5. Do not give space for personal development, always giving the same tasks.
  6. The lack of requests for constructive feedback to employees.
  7. Punish the feedback messenger. If you request feedback, then you should expect good and bad news.
  8. Do not be grateful to your employees, especially the most loyal.
  9. Take excessive confidence with personal jokes or tasteless.
  10. Do not defend your employees when they need it.

3. How to overcome these mistakes?

As a conclusion, here is my personal list:

1. Poor leadership makes a huge impact on your startup. Underestimate or ignore this impact leads to many startups to fail.

2. You hire employees in order to help you, not to give you more job or to steal your job.

3. It is useful to have feedback from your employees but the excess report is counterproductive. Just have in mind, the time a salesperson is reporting is the time they are not selling or with your customers. Meanwhile, the competitors can be there spending this time with them.

4. Spend time to understand the motivation behind every of your employee as it may differ and not fit in the same way for each of them.

5. The way you treat and reward your employees is very important to keep the motivation.

6. The employees are people with feelings. Not numbers and neither robots.

7. A motivated employee is performing better in the short and long term.

8. The targets requested to the employees have to be fair according to the available tools available.

I hope this article helps you to become a better person first. Self-awareness is very important to become a leader.

If you are interested in more articles, you will find at this blog.

Let me know your feedback on the comments below.

Javier Nieto León


The Startups Tips mission is to help your Tech Startups to go from Local to Global.

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