I was reading an article on why start-ups fail and also looked at a study by CB Insights. It had given 20 different reasons for failures. Among the top three reasons are:
- No Market Need: 42%
- Ran Out of Cash: 29%
- Not the right Team:23%
The high failure rates among industries are due to various reasons.
It’s evident that the startups that closed have failed to strategize properly on its business. So, how to avoid failures and increase the shelf life? Because unless you take care there are chances that you will not be figuring in the percentage still operating after few years.
- Periodic gap analysis
- Build a risk matrix on various process
- Put a strong internal control mechanism
- Reorient your Team
- Review your customers and Total addressable market
- Look global than your backyard
- Plan your funding needs
To address the top three failure reasons, focus on Team as it is one of the most important factors for success.
Plan your funding needs and hire a competent external team to do the funding process. Raising capital is a dynamic and ongoing process; you need to have a right strategy for fund raising.
Get an external help in doing a gap analysis on the following.
- Sales, Marketing and Revenue Gap Analysis
- Market Research in areas related to your business
- Present areas of focus
- Competition analysis
- Areas to focus (specifics based on a / b/ c)
- Functional Gap Analysis – Operations – Sales – Contract – Procurement – Supply Chain – Quality – Site Management – Invoicing – Collection
- Present Order to Collection Process
- Map it to the above functions
- Identification of gaps based on the areas to focus (1d)
- Customer Relationship – Finance – Accounting – HR – Admin functional and organizational mapping
Finally, once the gap analysis is done it’s time to reposition your product/service and the company for becoming a successful venture.
Author: Shrihari Allangala writes on matters of investment, funding and startups. He is a Director of WiseLane Ventures Pvt Ltd.