Relevant information regarding the various inconsistencies in the process of business making happens to be all quite fuzzy and unsorted. Reasons for failures and successes of businesses can depend on multiple factors, some controllable but some can hit out of the blue. For a particular startup to gain momentum in the financial ecosystem out there requires an in-depth analysis of their very own intrinsic limitations and try to weed them out as efficiently as possible and as quickly, so as to play it big. Routine deviations from proper worked out plans, lack of market knowledge, and most important of all lack of passion for your product form the majority of the reasons as to why startups cannot move very far.
In this blog therefore we will try to shed light upon various factors for performative limitations of startups, with pertinent examples from the current market scenario, with an elaborate discussion on their problems both inward and circumstantial. The exact motivation and state of mind required for entering into a competitive situation like this is a luxury which the majority does not seem to have. This along with properly mooted funding channels form the bedrock of the company. Lack of a thorough insight into the intricacies of a business can often lead to an entrepreneur going astray and eventually falling out on the many opportunities albeit with many challenges too. This blog will also help you to avoid the major entrapments of running a business and assuage those problems that continuously arise. Elucidated with examples on each point and datasets this blog looks forward to enlightening you on this subject matter.
90% of all startups fail within five years of their conception. Lack of funding, lack of product fit, lack of passion and motivation form the major bulk for the causes of their failures. They have been elaborated in details further:
● Lack of Funding Opportunities- One of the foremost reasons for closing off is this very point and it doesn’t come by surprise. According to market data about (38-40)% of all startups that close identify paucity of funds as their major call for shutting down. The startup ecosystem is highly competitive and volatile and to get hold of major funding channels is a daunting task. A report says that only about 0.01% of all startups do actually get VC ( Venture Capital) funds. So even if we talk about angel investing or other high profile investment opportunities it is really very rare and quite difficult to gain these channels. Those investors look for a highly motivated and an efficient team which most businesses don’t necessarily have. Sometimes the huge cost of running the business or setting up a massive technical infrastructure as we are going to talk here is not financially possible and so they are bound to fail.
37coins- 37coins was mooted as a Bitcoin technologies developer. It started its operation in the year 2014. The Company boasted an initial funding amount of about $525K. Based in California it tried to develop its services for the hottest new markets of Philippines and Singapore. It developed an SMS gateway system for the purpose of easy offering of crypto services and messaging.The initial technical incapability confined it to the geographical location of only the States though. The investing fund couldn’t satisfy the funds required for correcting its technology and expanding it further. The company said that it requires a whole lot of funding rounds after its initial two if it was to continue its operation further. A robust business model in a hot new crypto world but the lack of money smothered all of those ambitions. The company has, since 2015 disbanded its financial services.
● No Market Viability- The duration of your product worthiness in this highly volatile and novel technological world ,where thousands of new startups try their luck each month is at a frightening low level you have to have a rigorous knowledge of the market to which you are catering or trying to attract and acute knowledge of your own product and the need for a revamp if it requires so. Products which have no need or services that don’t try to solve issues of people are basically useless. About 30% of all startups list lack of product aptness to their downfall too. Poor quality products and absurd services also come in this category. Timely updates and design upgradation could prevent them from happening but most of the companies don’t focus on these factors. Here we have talked about a company which lost its sheen eventually.
Moped- Moped was a social media app which started offering its messaging services from the year 1998. Headquartered in Germany it could be used for exploring places for food, parties, and various other socializing activities. Valued at a million dollars it started losing its enterprising factor with the advent of similar service offering startups. Its failure to properly navigate treacherous market situations and upgrade its capabilities saw its subscriptions and usage decline rapidly. In want of better services the customers just shifted their tastes and preferences, the company had to shut down in the year 2014 as result.
● Lack of Passion and Flawed Business Models- Almost all of them have this problem at their core. When the company and the work demands the maximum attention most of the entrepreneurs give up. When the time is ripe for some drastic measures they show a lackadaisical attitude. Even if there has been a series of well funded rounds, the product is in demand or the future looks good, if there exists a problem with the way the entrepreneurs work, some problem with their mentality and methodology it can just be disastrous to say the very least. Serialising the affairs for managerial efficiency is a must for every business operation. It goes without saying that the passion and faith that a team puts in their work shows its results in the output they produce. It is directly proportional. There must not exist any kind of roadblock at least psychologically. An example provided here will elucidate this fact properly where undermining of one’s faith in their business periled and ultimately led to its shutting down.
In 2011 two Harvard Business School’s Graduates Alexandra Nelson and Christina Wallace conceived of an apparel company. The initial funding round after various product testing stages valued their startup at about $950,000. The initial demand for their collection was quite high and many investors joined in too. About 39% of the customers that bought from Quincy’s First Seasonal Collection made repeated purchases. The demand was higher than expected and highlighted the need for heavy investment in inventories for meeting up the consumer demand. But there was a systemic issue ,deeply ingrained. There was no proper allocation of work areas between the two co-founders. Important areas such as product design and inventory assessment fell in disarray as a result. Their personal as well as professional relationship deteriorated. No regulated plan and no provision for the dire need of inventories led to their abrupt downfall and an eventual shutdown in the year 2015. So here we could notice that even if the circumstances are ripe, personal and professional motivation to work in a coherent manner can lead to disastrous consequences.
Avoidance of issues pertaining to the aforementioned problems- Myriad literature and lectures exist so as to ascertain success in the field. Not mulling over obscure situational falls, we will confine ourselves in the talk of motivation and its necessity. Our motivation must be powered by our sense of attitude and effective knowledge of the market. The worthiness of our product and the resilience of it must be rigorously put to test at various intervals. Advertising and marketing of the product must be sorted and properly tailored for the betterment of people and that alone. Business analytics and a keen insight into the rival businesses could also affect the result in stupendous ways. Perseverance and focus are the key drivers of our business and they must bolster our spirits if they can’t change adverse situations at the very least. Lastly there has to be a burning desire which doesn’t get smothered by trivialities of business, if there is it in itself is the recipe and the best of all, for success. A person needs nothing else then.