Why many startups fail to ‘take off’?

By Shridhar Bhagwat

Most founders initiate their projects and then get their friends to join and develop their idea. But a lot of them fail to take-off. Have you ever wondered why?

There could be many reasons. Lack of proper planning, faulty execution, high expectations and valuation, lack of financial prudence and paucity of funds are some reasons why startups die a premature death.

However, according to an estimate, roughly 20% of the total startups that sprout in a year in our country fall prey to boredom!

Surprised!

Yes, it is true.

These are startups, mostly tech ventures, that are born in hostels of engineering colleges, of which we have a vast number in this country, when the ‘dude’ of the batch gets an idea — they flutter and flourish for a few days and then run into rough weather when the exam dates are declared or campus recruitment starts.

The real challenge is encountered by startups that are more than six months old and have created prototypes, but then run into a wall. They have nearly maximized their collective abilities to develop and create that product.

These startups require three lifelines:

  1. – Tech experts
  2. – Business experts
  3. – Support teams

Tech experts: They are people who take the product to the next level (in case it’s a technology / product-based startup). They are also required to bring the product into market with modifications to cater to needs of the target customers.

Business experts: These experts are required to upgrade the startup from an ‘idea’ to a business model, creating clearly defined revenue streams, timelines for break-even point (BEP) and overall market positioning.

Support teams: Once the ‘idea’ takes off from paper to real product, it will require services, staff and people to nurture it. Many founders end up multi tasking due to lack of funding and this reduces their speed and productivity. Key skills like marketing, finance, sales and technology require specialists who can be associated on full-time or part-time basis.

to incubate or not!
To incubate or not, that is the question!

The above scenario is very ideal and it is difficult to get all such people readily available – without hitting the pockets.

This is Step 1, before the startup enters the market and engages customers, it requires a stable setup. This also helps them to showcase the business/company as a stable and profitable proposition to attract investors.

Can startup incubators solve provide for the above-mentioned requirement?

Can mentors and business consultants provide startups with all these services under one umbrella?

There are many people who are presently fulfilling some of the above requirements. However, there is rarely a one-stop shop where an entrepreneur can expect all these services at a reasonable cost or get incubated for equity.

Accelerator programs and T-labs do suit technology products where they need high-end equipment and laboratory to experiment, validate and create prototypes but not many such products/startups mature into real business entities. Business incubators can definitely help those in need.

Business has always been a mix of arts, science and maths combined with human intelligence, with ability to influence which is very important.

Entrepreneurs need to evolve, they could be best techies but once they are into startups, they need to scale-up from nerds to birds which can fly in the sky. You need to change gears and become marketer, leader, salesman, customer care and people’s person — all rolled into one. If you find this difficult, then you should understand that you need someone who can help you with these skills till you can afford to hire specialists.

Your product can fail any test — customer choice and even market needs — but you should not fail in your entrepreneurial spirit.

Shridhar

 

Shridhar Bhagwat is a management consultant who has spent more than 2 years studying 50+ startups and 15+ incubators. 

2 Comments on Why many startups fail to ‘take off’?

  1. Good writeup. how many startups you or your company have been till now, and how many of them are succesfully running?

    • Thanks for your appreciation Nishit. I am working as Business Consultant advising Startups and Entrepreneurs for last 3 years. Personally i have been part of 5 ventures and the experience has been learning. As a consultant we meet up early stage ideas and startups which are slowly loosing track to their core concept. Founders inability to stick together during takeoff is another big issue.

      Hope to share more stories in coming months.

      Regards,

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