If Not Capital, What Hinders Start-Ups From Growing Into Enterprises?

Shalini Bhattacharya, Founder & Executive Leadership Coach, White RayA certified leadrship coach, Shalini helps leaders to attain sustainable growth by leveraging the emotional intelligence

A study conducted by the European Association of Business Angels found that around 50 million start-ups are established every year. Of these, 90 per cent start-ups fail within four years of inception. While there is no denying that a lack of capital and a lost market are major reasons for an organization's decline. It is worth noting that there are several other reasons why start-ups fail in the early stages. These include a lack of trust and communication among the team, abrupt upscaling, aversion to feedback, lack of leadership skills, burnout, and disharmony with investors/co-founders.

If looked at closely, it becomes quite clear that the basis of all these issues is a lack of leadership skills and the loss of a holistic vision. While all start-ups are established with an overarching vision, they soon lose their way due to the several pressures that are characteristic of business. This is exactly where things start to go downhill. For instance, Call9, a promising US-based health sector start-up with $34 million in funding, failed mainly because of a strained relationship with a key investor. Similarly, online interior designer Laurel and Wolf closed down mainly because of management and operational challenges within the organization.

While each challenge is unique, the deciding factor in each case is ­ the mindset. A successful start-up can differentiate itself from a failure through a mind-set that is based on growth and not rigidity. When the mindset of business leaders is growth-oriented, challenges and momentary failures are perceived as growth opportunities instead of the end of the road. On the other hand, failed start-ups often have leaders with a fixed mindset that adds a lens of self-reflection in the form of inability, confusion, and frustration. This mindset is very risky, especially for a new business. When the mind focuses on negative assumptions and continuously builds negative conclusions, it slowly turns into reality. Failure, in this case, is inevitable.

Achieving a Growth Mindset Through Emotional Intelligence
A person's mindset leads to innate emotions, experiences, thought-processes, and responses to situations. Every decision one makes is driven by their interpersonal and intrapersonal capabilities. Together, these two are the biggest pecies of puzzles that, if put together in the right order, can make an individual emotionally intelligent.

Emotional Intelligence is all about being truly aware of yourself - your thoughts, emotions, and actions. Further, it involves knowing how
exactly these collectively impact your behaviour and your performance at large. Once you know how situations impact you, you can use this information as a reference point to under-stand the actions and behaviour of others around you. Through such self-awareness, you can form trusted relationships at the workplace or even outside of it.

Emotional intelligence as a Key for Start-up Success
To be truly successful, an entrepreneur must learn how to manage relationships, both internal and external. Through higher emotional intelligence, a leader can boost retention in terms of clients as well and employees.

The failure of, an autonomous vehicle product startup, caused due to conflict between the co-founders despite a fundraising of $128 million in the initial year, and that of DaWanda due to lacking innovation and risk management, speaks volumes about how failures can be averted if the management focuses on mental resilience and emotional intelligence.

A person's mindset leads to innate emotions, experiences, thought-processes, and responses to situations

Business is stressful. There is no simpler way to put it. Therefore, start-up founders and team leaders must invest time and resources into the improvement of interpersonal skills. Along with these, leaders will also need to practice adaptability in order to thrive in the face of challenges. Flexibility of thoughts and actions is a skill that they must ace so that they can quickly change their approach in case of a challenging/problematic situation and emerge victorious from the metaphorical battle. It is only by harnessing these skills pertaining to emotional intelligence that business leaders can achieve a growth mindset.

So, how do leaders achieve this Mindset and become Emotionally Intelligence?
Leaders who lack interpersonal skills and emotional intelligence often display discrimination among employees, lack of focus, lack of direction, inability to take responsibility, and an inability to set an example for their team. For such leaders, it is important to raise their emotional intelligence skills, the first step to-wards which is complete self-awareness. They need to identify their leadership gap and work towards bridging this through communication and consideration.

Apart from self-awareness, the skills that constitute emotional intelligence include being consistent in interaction and actions, forging trust, delivering constructive feedback, being authentic and genuine, empowering people, appreciating efforts, practicing active listening, defining healthy boundaries, and dis-cussing solutions instead of problems.

While you may not be able to learn things over-night, permanent change will come gradually. Leaders will need to strike a balance between the emotion-al and rational parts of their brains even in times of stress. They will have to learn the skills on a deeper, emotional level - experiencing and practicing them in their everyday life. They will have to become consciously aware of their default tendencies, strengths, and weaknesses and then, take conscious steps to improve the situation instead of avoiding confrontation.

When it comes to Business, Change is the only Constant
Here, we are talking about changing your mindset and approach. While an inflexible mindset will not be able to achieve much, a growth mindset will allow leaders to adapt in an uncertain business landscape and approach challenges with renewed confidence without being averse to problematic situations.

According to research by CBinsights, disharmony between teams and their management is the top reason for failure after fund crunch or ceased market need, for most startups to fail. In order to avoid such a situation, achieving and displaying the highest levels of emotional intelligence should be at the top of the priority list for business leaders. This, coupled with complete honesty and transparency, will contribute to their continued success. Start-ups, then, will thrive and grow into flourishing enterprises that are not just successful, but also great places to work.