According to Wikipedia, a startup organization (startup or start-up) is an entrepreneurial venture which is typically a newly emerged, fast-growing business that aims to meet a marketplace need by developing a viable business model around an innovative product, service, process or a platform. Start-UPs are growth oriented; prefer funds from outside or angel investors, driven by innovation and on the lookout for a large market to thrive.
However, majority of the start-ups meet with their failure and exit from the business scene soon after their launch.
Let us try and explore as to where actually the start-ups go wrong.
- When startups fail to find the adequate capital for their growth they fail. They are not able to find the right investors, or may when the investor lacks clarity, it would get only too little money, which is far from the required for a successful growth.
- Sometimes, the startups come up around creativity, but lack business plans which are realistic and achievable. Such organizations which do not have proper business plans for growth will often meet with failure.
- Sometimes organizations come out with products for which there is no market. Once again such organizations are creativity centered, and as such they start production, without analyzing, the needs, wants and problems of the people or in short without doing proper market research. Such products naturally will be rejected.
- If the organization is founded by a single person, then fundamentally, it is lacking the team. It will be too hard for the lone founder to pull things ahead, and the initial phase beyond doubt, will be the struggling phase. Most of them succumb to failures at this phase.
- Sometimes, organizations may have multiple founders. However, if the founders are not professionals, the fights between the founders will lead the organization to its untimely death.
- If the startups fail to hire the right talent, there is no future. Employees with the right talent are the biggest resource for the organization. Startups which fail to tap the talent are getting ready to fail.
- Start-ups are new, but they need to be knit together. There should be collective responsibility. Startups which fail to work together as a team have decided to script failures.
- An outlet of a start up in a bad location can mar its success. A thematic restaurant behind the walls, having no parking facility and with less visibility to public has more chances of failure on account of its bad location.
- The ideas of some startups are derivative or a copy of other or used ideas. These ideas lack originality, and hence may lack in having a unique selling proposition or competitive advantage. They will be eroded in times of high competition.
- Some of the startups adhere strictly to business plan, without understanding the changes in the business, economic and political environment. Organizations which are having much flatter structure, can change strategies in accordance with the external change factors and move ahead. Organizations having more rigid structures are likely to fall in the times of change.
- Sometimes, the startups will receive a gush of customers initially for its products, which means quick and hot money at the very initial stage. Without understanding the demand in future or over estimating the demand, the startup may divulge in more investments and spending which finally may land the organization in lurch.
- The burning desire initially found in the minds of the founders may be quenched by the passing of time. The lack of motivation, halfhearted efforts and varied interests of the founders may lead the organization into poverty.
- Every organization fails if it fails to attract customers. A startup which fails to build trust and repute will be wiped from the minds of the customers. That is why brand building is taking place in a big way. Hence, every startup which fails to attract customers will eventually fail.