Startups are easy to launch, but it’s a daunting task to sustain them — Here is why
“Chaos in the world brings uneasiness, but it also allows the opportunity for creativity and growth” — Tom Barrett, U.S. Politician
In the last 5 years, I’ve provided support to several entrepreneurs and business owners in developing financial and business plans, either through direct support to them, or providing relevant tools that enabled them to develop a compelling business case for their ventures.
I have also seen different startup founders establish different goals for growth and profitability for their ventures, but the question I have been struggling with is why is it difficult to sustain a startup? I think that in order to address that question, we have to step back and think about how we’ve understood and pondered both the challenges and the real meaning of ‘sustainability’.
What does ‘sustainability’ mean in this context anyways? a transformative business model or enough cash in the bank to pay recurring expenses such as salaries, rent and other operating expenses of the business? Does it mean having innovative platforms that solve real social problems or staying self-funded for as long as possible? Considering the overall objectives of any for-profit venture is to create value, maximize its shareholders’ wealth and be profitable, why should entrepreneurs and startup founders bother about ‘sustainability’ when launching their ventures?
For a venture to be sustainable, it has to been built ‘consciously’
· to identify opportunities in its business environment,
· align it competence, and resources in creating solutions to real-social problems in order to remain relevance,
· manage its competitive and environmental risks, and
· create value that translates into profits for the venture as a going concern
Startups that are built to last ‘consciously’ think about profitability from an innovative standpoint by solving real problems, create social benefits and establish a market position with a greater opportunity to create value and remain profitable. These startups thrive when competitors either fade away or flounder.
Here are three directional pointers to sustaining a startup
1. Embrace Opportunities to Create Value:
Sustaining a venture means that founders need to be flexible to embrace opportunities that create values. It may initially require a lot of time and energy to get right. However, to embrace the possibilities of a changing business climate, opportunities need to be met with the required competence and converted into solutions through a range of strategic initiatives.
2. Create value that translates into profits for the business:
When a startup meets the needs of its customers it creates value that leads to incomes for the business, this positions the business well enough to raise funding for expansion and growth. Too many startup founders focus more on raising funding — which is necessary and a fantastic idea, but pay little attention to generating revenues which is what sustained the business as a going concern. By creating values that meet the need of customers, startup creates wealth for the business and also remain profitable.
3. Solve Real Problems and Create Benefits:
Startups that scale and make progress solve real social problems and create social benefits. A business creates social benefits by creating values that meet the need of its target market — this clarifies and validates whatever solutions the venture has put forward. The solutions become self-sustaining when it translates into profit for the ventures.
To sum up, I would like to emphasise that none of above mentioned pointers is a sure-fire way of sustaining a startup. Startup founders without the right mentality and vision will pull the plug after that initial try. Sustaining a startup is a tough call requiring conscious effort, persistence, people skills, a lot of critical thinking and continuous evaluation of the business performance.
Should you have any questions or need more insights, don’t hesitate to get in touch via @ajanakubiodun