Dear Departed Startups

by Noc Team on May 18, 2011

By Halima Khan

There is a growing trend in our software industry these days. This trend is of ‘startups’. Smart business entrepreneurs start with the conclusion in mind. They identify every step they will be taking way before they embark on the journey. 

Eric Ries in ‘What is a startup?’ defines startups  “a human institution designed to deliver a new product or service under conditions of extreme uncertainty.”

‘Conditions of extreme uncertainty’, where you have absolutely no idea what lies ahead.

In a research by the U.S. Bureau of Labor Statistics the results illustrate that practically six in ten businesses shut down within the first four years of operation. Here we recap some possible reasons for such high rate of failure:

Poor Execution
A clever idea is not enough for success. Crisp execution is very important to the success of fresh businesses. Poor execution is the reason for the demise of most startups that go out of order. There are more than a few ways you can keep away from execution malfunction. Foremost and as early as possible, one should carry out a truthful appraisal of your skills. This will help you to focus on tailing prospects that are associated with your strengths.

No Viable Market

It’s necessary to follow a line of investigation and certify the market prior to you decide to get underway with your business. Have a discussion with probable customers and unearth what they in actuality could do with.

Too Much Leverage

It’s paramount to maintain the largest part of costs changeable at first and make use of equity capital to fund your startup until your company has been in existence more or less a year or two. You build up some assurance in your capability to project sales. Holdup making investments or taking on predetermined obligations until you have a stable collection of customers.

Undercapitalizing the Business

If you don’t have an adequate amount of savings to envelop the necessary investment, it may be alluring to commence your startup under the supposition that you will be able to get hold of funding in a while. However how long can that while be no one knows.

Lack of Competitive Advantages

The deficit of bloodthirsty barriers renders them tremendously susceptible to original applicants, who will with pleasure cut prices to the bone to steal customers.

Competing Head-to-Head with Industry Leaders

A positive signal of imminent failure is a capitalist who plans to bootstrap his fresh business while contending in a straight line alongside to unshakable market leaders.

No Understanding of the Business

Countless numbers of people scuttle thoughtlessly downhill on the trail of beginning small business based on not anything more than their passion for a scrupulous spot of interest.

No Backup Plan

Despite the uncommon and notables winners, casinos don’t bloom on losing money, just as a 50% collapse rate for startups doesn’t bode well for those who don’t map for the likelihood of breakdown.

No Exit Strategy

All new business ventures are initiated with the inspiration of success, but a small number are launched with some scheme at all in relation to what to do if those gigantic dreams draw closer to materializing. ‘What are you going to do when you win? Do you want to run the business forever?’ There are many such questions that should be answered before the launch so all possibilities have been dealt with before hand.

 

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