Manoj Kumar Trivedi

Operational Expert / Founder Director & Business Mentor, iGlobal Research and Analytics

8:34 PM, 23rd Apr 2018

Why Start-up fails

It is not only a common perception but reality - Why 90% of Start-up fails in first year itself.

I am sharing my experience on request of Community Manager-Tapchief. 

At the outset let me clarify do we have clarity about Start-up, or, what do we mean by Start-up. Flipkart has started on the plea of Start-up but ended in normal business. The essence of E-Commerce lies in hypermarket concept, but in the run-up for customer service, logistics improvement the hyper-market concept is ideally forgotten.

Start-up ideally has innovative product or services. Every business is now being considered as Start-up, as it is being started afresh.

Some of the shortfalls are mentioned below leading to failures:

1) Shortcoming of Founders: Most of the Start-up is initiated by salaried employees with very limited business insights. They venture to start something on their own. Being entrepreneurs requires  dedications and razorfocused approach.  The singular priority in the life will be building the company: everything else secondary.  It needs a complete different skill set in people management and dealing with clients/customers.   A significant number of founders, inspite of their burning desire to succeed, fail to transform them to true entrepreneurs.

2) Cash problem: Limited finance with no financial support is yet another reason. No one leader, entrepreneur or CEO can wear all the hats with due knowledge of all the functions, but should have a minimum required skill with budgetary vision to strart with to ensure maintaining cashflow till next financial turn. 

3) Product & Market Economics : Does your product has some edge, or, it is at par with several brands available across the market? Before choosing a product, economic survey is essential guaging demand and supply gap, market-wise, city-wise, area-wise.

4) Manufacturing Economics: Do you have complete insight of manufacturing economics? If not, neither you will be able to scale up the operation, nor, you will be able to meet economies of scale leading to high cost due to  several operational hidden costs.

5) Dissent note: Most of the start-up's are on joint venture and ends up due to lack of understanding with ego-clash.

6) Managing ability: Given the length of service, most of the prospective entrepreneurs have not yet learnt how to climb the ladder of leadership. They dream to start when they are unable to manage themselve, the very first step of the ladder. They jump into the ocean of managing work, managing team and managing organisation leading to failure.

7) Technocrats : Some serious entrepreneurs jump the gun with their extreme technical ability and innovative product. But a technocrat has to be a successful bureaucrat in order to start an organisation with all relevant skills.

8) Overconfidence :  Being a confident, disciplined, and focus entrepreneur is a good thing. However, the problem arises when an overabundance of confidence leads to arrogance. This, in turn, can result into your startup failing. Refusing to use advisors or network can lead to mistakes or even the unwillingness to change the product to meet the business requirements or customer expectation can also lead to a number of failures.

9) Fly after you get the wing: Any start-up or business has to be started as a small venture in a limited market. Dreaming big through digital and social marketing is no way lead to success. Gaining experience and skill with thorough market survey over the period of time is the essence.

10) Be a good strategist. Derving strategy comes through experience which can be safely learned through internship for many years. 

3 Comments
Komal Gupta

Thank you, Mr. Manoj, for sharing your insights. These are some excellent points!

Reply
Jayaram TR

True All above or few of them at least drains the passion which results in failure of start up .

Reply
RajKishan G

Awesome thoughts and practical too

Reply
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