When to Launch a Startup Company

In fact, any time; provided you heed to some of the cautionary issues that are outlined in this post and also do not possess a faint heart. Of course, gallantry was not the sole criteria that had led to the worldwide success of Apple or Microsoft but the fact remains that Bill Gates (along with Paul Allen) or Steve Jobs (along with Steve Wozniak and Ronald Wayne) were not chicken hearted people either. They had the concept, struggled hard and possessed complete confidence to reach the summit before being crowned as leaders in their respective field of action.

Nevertheless, everybody is not Bill Gates or Steve Jobs who have been recognized as legendary figures as there are hundreds of others who suffer from startup failures and have been ruined for their wrong decisions. However, here are some of the unpropitious issues or pitfalls you need to be careful about before embarking on your entrepreneurial journey through a startup venture.

>> Poor Market Survey

Many startup companies fail because of not being able to assess market demands. Oftentimes, entrepreneurs are guided buy their own needs and develop products that are not at all needed by people. Some also try to develop silly products that are too expensive for the common man, at the same time, having very little or no utilitarian value. For instance, you can device a system for running an automobile on water, but the cost of utilizing such a device becomes so enormous that it is not worth investing in. Also, most startup entrepreneurs fail to pay adequate attention to users’ needs and end up in total failure. Elaborating the issue, Paul Graham said, “Probably the biggest cause of failure is not making something people want. The biggest reason people do that is that they don’t pay enough attention to users. For example, they have some theory in their heads about what they need to build. They don’t go out there and talk to users and say ‘What do you want?’ They just build this thing and then it turns out users don’t want it. It happens time and time again.

>> Poor Cash Flow management

Cash flow is one of the most critical components of success for a startup. Without cash, profits are meaningless. Many a profitable business on paper has ended up in bankruptcy because the amount of cash coming in doesn’t compare with the amount of cash going out. Startups that don’t exercise good cash management may not be able to make the investments needed to compete, or they may have to pay more to borrow money to function.

>> Poor selection of team

Poor selection of team members also ruins a startup in most cases. This is especially true with units that aim to provide technical support to bigger companies. For instance, if a startup IT Company that offers remote technical support for computers is allowed to run by unskilled labor force, it is bound to collapse before long.

After spending endless time with many startups, I have come to learn that, apart from the factors enumerated above, one of the most common causes of failure in the startup world is that entrepreneurs become far too optimistic about how easy it will be to acquire customers. They assume that because they will build an interesting web site, product, or service, that customers will beat a hasty path to their door. That may happen with the first few customers, but after that, it usually becomes an expensive task to attract and win customers, and in many cases the cost of acquiring the customer (CAC) is actually higher than the lifetime value of that customer (LTV). And in most cases, it becomes the beginning of an end.