Nov 16 2014

5 points about Startup Failure

Help ImageMore than $50,000M is invested each year into the new startups in USA. Hence there are lot of new ideas coming up in the form of Startup Business. But very few sustain while others abandon or close the company. We are now to see the reality check about why the technology industries get closed. According to statistics by CBInsights most of the technical startups has a lifespan of within 20months. Following are few reasons for startup failure according to analysis solution from few 100 articles

  1. Not able to get investment
    • Does not solve market problem
    • Not able to grab attention of investors
    • Not able to present a prototype
    • Not having your own team
  2. Did not go as planned after investments
    • Not planned sufficiently for the investment
    • Not performing regular checks on ROI
    • Not streamlining the investment properly
    • Not changing tactics when failed
  3. Dream of earning big without proper actions
    • Losing hope if nothing works
    • Feel as winning/achievement when first customer comes in
    • Distractions from various sources
    • Reducing efforts
  4. Not in pace with the world
    • Competition analysis not done correctly
    • Too much planning
    • Not ready to take risk
    • Not enough market study
  5. Not able to build the solution/technology
    • Expensive team
    • Unproductive team mix
    • Lack of technical skills
    • Not enough funds for required equipments

Most of them are solvable but three issues which really prevents industries from making progress are

  1. Investment
  2. Experience
  3. Manpower

 

Since less/no ROI flowing in, the startups are tied up from taking the right actions. Instead they are made to take actions according to the budget they can offer. Hence manpower and hands-on experience will go missing. This is the situation of almost all startups that fail. It could be a slow or instant death depending on the decision taken by the management. But instead management could look out for less expensive remote teams which can be more beneficial.

 

There are thousands of reasons a startup could fail. We have just seen a glimpse of the most basic issue. It is similar as chess strategy – Never change an aggressive coin as defensive. You can change your tactics/strategy but never your goal. Most of the startup undergoes responsibility vs risk confusion. But the leader who chose both always had the maturity to touch the skies.

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