What decides the Success or Failure of a Startup?

WHAT DECIDES THE SUCCESS OR FAILURE OF A STARTUP?

Following up on my assurance that I would come up with some Quality content that would not only be related to Business Development and Improvement, but also value added information for all Entrepreneurs, here is a warm up post.

As a consultant I often come up with aspiring youth trying to do something of their own either Mid way in their Education or just as soon as they have completed their Graduation. Some of them are lured by the Tag of an MBA qualification, spending lakhs of rupees to pursue the Masters, surprisingly and shockingly sometimes at the end to find and share with me that either they had made a wrong decision. 

Many of the youth who are mid way through their Engineering/ Medical or other Technical Educational Semesters; voice the unpleasant feeling that they had taken up the education only because their parents forced them to do so or one of the parents was in the same field. They often end up either leaving the education Mid-way or completing the full education but with a blank mind as what they would like to do ahead in their careers. I will write about this in another post on my personal Blog but for now the same situation is prevalent in the case of many Start-ups, hence this post.

Let us first understand what Mindset an aspiring Start-up Candidate goes through. Similar to student who are caught at the cross-roads at each level of their education, be it the 10th Std, or the 12th Std, Competitive examinations or a decision to be made on which field they need to select, Start-up candidates also go through the same phase. There will be a lot of the so called “Guru’s” and even many sites which offer you Start-up assistance right up to the final stage for a whopping fee. But it would be prudent for any new comer to have a firsthand review of what makes a Start-up Fail or Succeed. 

Like everyone would always like to hear the Bad news first, let’s take a simple review of the probable reasons Why Start-ups Fail. This is no Thumb-Rule or Rules etched in stones because each Start-up has its own profile, prevailing situations that they operate in and how they are managed, so these guidelines should be taken only as a helpful yardstick to define your path even before you actually have your Start-up.

WHY YOU COULD FAIL?

1. Know your skills and capabilities with respect to the Business you are planning to start. Know your purpose for setting up the Start-up. If your skills and capabilities mismatch the purpose of the start-up, especially in cases where I have seen many aspirants totally opposite of what they are providing through their start-up you may be in for a sure shot failure.

2. Match your purpose and end goal of the Start-up with something you LOVE to do, and not out of Force, or just because it seems or looks attractive.

3. You have to BELIEVE in what you are doing, and not do it half-heartedly or always second-doubting you’re every move. If that is existing at the start itself, just shelve the proposal.

4. Put the customer First – a large percentage of the Start-ups have failed because they didn’t solve the markets need and they never put the customers first.

5. Lack of Focus on every step of your proposal and plan for start-up can be devastating. You cannot pay more attention to one and overlook the other or you are in for a shock of your lives. 

6. Business Model Failure – most Start-ups fail because they have never laid out a proper Business Model or worked on it. The lack of attention to the CAC/LTV Rule – (Cost of Acquiring a Customer / LTV – Lifetime Value of a Customer, which we will deal exhaustively in another post), can be detrimental to the very start let alone growth of any Start-up.

7. Poor Management Team or Setup – You can’t do all Businesses Single-Handedly. In some cases it may work but in most cases it would be prudent to have a well planned team in your Start-up or your whole idea could fall like a pack of cards.

8. Fiduciary management is always recommended but it may not be possible in small set-ups but running out of Cash, Lack of Money management and Bank Support issues can cripple any Start-up.

9. In cases where the Start-up has a product to sell and does not deal in intangible products and services it is very important to define what product you want to promote or sell, and how it stands with respect to the Market needs. Any miscalculation in this department can be devastating.

10. Some Start-ups may get off to a great start but fall like a pack of cards due to Premature Scaling meaning, trying to do too much too soon, out of over-enthusiasm or just to honor the customers ego, which can also be a bad proposition. 

We have seen the basic weak points due to which a Start-up may fail. It could be any one of the above reasons or a combination of many so a prudent, sincere, and honest approach to analyzing all the above points is very important. 

HOW YOU COULD SUCCEED!

No Guaranteed formula is available for a 100% Success of any Start-up but we can rest assured that if you follow certain basic rules your success ratio could always be tipping the top of the scales. Let us now look at the brighter side of the Topic being What Tips you could follow to ensure that your Start-up doesn’t fail.

1. Put your Ideas into writing – Ideas can keep coming and going especially with so many people giving suggestions and ideas so first thing first start documenting all that you do on a decent notebook or notepad that will remain like your Bible till the end.

2. Take a serious review of your Skills and Capabilities and how you are going to apply them to your Business. If you are falling short somewhere develop them first, then proceed. Take a honest SWOT analysis of your Capabilities and your skills to match the Business you are planning to undertake.

3. Define what product or Service you are going to deliver through your Start-up, and be very clear about it. Work around that decided path and leave no stone un-turned to ensure that you deliver what you promise.

4. Setting up and managing a Business is not as easy as it looks so, meet with your small business development center, take advice from them. They sometimes have amazing ideas up their sleeve which could help you.

5. Identify your customer base. Once that is identified find out what your customers want using surveys existing or even if you have to hire a professional survey agent do it. Remember today Customer is King.

6. Depending on the Product or Service you want to sell decide on a Catchy Name for your firm that will appeal to the masses. A good name that makes the customer feel connected as well as wanted hits the mark.

7. Financing is very important so Outline your finances. 

8. Every company that starts has to define an Project Growth, so Have a plan for your future well laid out and track it diligently.

9. Unless you have a comfortable Seed Capital on your own, don’t take the risk of doing it all on your own and that too, on a hairline margin. Make your Bank Work for you. If necessary secure a loan or any other type of investment to support your whole setup.

10. In case of having a business that sells a Product ensure that you manage your Inventory efficiently.

11. Handling a Business is not an easy task and needs backup support in terms of additional staff. Consider hiring a professional Financial Advisory and also a good Team rather than trying to do a one man show.

12. Get all your Licences and Statutory Compliance in order as many times they are the hitch in the whole smooth process of running a business. 

13. “Organizing and Delegation” of responsibilities and work load is very important for the success of an organisation so pay extra attention to this point.

14. As I said Customer is King so to deliver to them what they want you would need to have a Targeted Promotional, Marketing and Sales Campaign handled by professional team of employees, or outsourced to an agency of repute. 

15. Networking is the need of the day today and any level of Networking be it one to one with the customer or Social Media interaction and connectivity is a key to success of any organization.

16. Customer Feedback is utmost importance so try to keep a feedback mechanism in place, collect references which you could use for attracting new customers and even using as a promotional tool.

17. Person to Person contact between the Owner and the Customer can work wonders. So be accessible on all terms such as email, social media, and any other tools you could use to put his in place. You will be shocked how much this factor can help in enhancing your Business. 

18. Remember that the Start-up you have setup is not for your own personal enjoyment – it is for the service of the customers. So deliver what you promise. If you fail to do so, or shun away from your assurances it will have a negative ripple effect on your business even to the level that it could collapse in a matter of a jiffy.

19. Be open to criticism and constructive feedback. When you are adaptive to change and do not fear any new turnaround strategies, it attracts the attention of Customers who will develop a Trust factor in you and your Organisation which we often call as Brand Loyalty which is the single largest Success Mantra for all upcoming Start-ups.

20. Anticipate the future because no one knows how the customers mind can change. Be aware of the Trends in the market and bring about a proactive change, if possible involving your customers too and you will be surprised how well the customers will react to your treating them with that respect.

21. Surround yourself with the right people, be cautious as we should never underestimate the value of good useful customers but also never underestimate the power of someone who isn’t in line with your line of thoughts or success.

22. Most people get tensed up with the difficult situations you go through when setting up a Start-up, but I suggest you Relax and give time for yourself in between or at the end of work hours as in not to burnout yourself – mentally and physically.

23. Above all the whole process of setting up and running a Start-up is a taxing process which at times may test you to your limits so learn Never to give up. 

What I have shared is only the text version, which is totally different from what you will face practically, and application of each of these steps is specific to respective needs of the Start-up. It is always good to discuss, share and talk to people concerned who can guide you, so if you have anything that I could help you with, you can connect with me from the Contact us Page on any medium and I will be happy to help you.

Wishing you all the Best in your Endeavors!