The fatal pinch: Why innovative start-ups fail

Eureka! You have an idea.

You have people who believe in it.

You burnt the midnight oil working on it aka you have a start-up.

And now there is only one way, that is up.

Every founder sets high expectations for themselves and their idea, which is natural but also risky. It is easy to get swept away with the excitement of doing something new & innovative, but this can also act as hubris that can prove fatal for your plans. Even the most brilliant business models have fallen prey to failure due to the founder’s inability to see a clear and bigger picture which results in uneven execution, begetting a domino effect of sorts.

Poor decision making, ill-thought-out marketing strategies, hasty expenses, irrelevant content, and not targeting the right audience are only some of the factors that lend incoherence to a business. This eventually leads to directionless-ness and higher costs that are harder to bear as you go. The fatal pinch comes when one realises that some of this could’ve been avoided with some patience and guidance.

Factors to failure

Many start-up founders attempt to be the jack of all trades and end up becoming the master of none. Let’s look at some of the not-so-key ingredients that founders should avoid in their recipe for success.

Enthusiasm alone does not equal logic

Concentrating solely on customer bases and revenues puts a lot of undue pressure on the team. Even if the actions of a founder are enthusiastic, it is possible that the team loses their confidence in them, and waning confidence in leadership are warning bells for any venture! As a founder, ensure your optimism and vision trickles down to everyone else in the organisation. Having a clear roadmap, and a streamlined and frequent chain of communication with your team will help ensure that.

Avoid internal dissatisfaction

Inconsistencies within the team members prove to be a reliable business killer. From the very top to the bottom of the pyramid, cooperation loses priority resulting in a game of power grab. Moreover, dissent in the relationship of the founder with investors and board members causes complications and it becomes hard to meet the milestones. Foster a culture of clarity among the founding partners and allow everyone the space to experiment and handle their department instead of resorting to micromanaging.

Idealism does not give realistic solutions

Founders are idealistic people, often putting their own sweat equity in building their idea up before they seek funding. More often than not, however, capital is likely to dry up creating a vortex of financial disbalance because it takes time to find the right investor. As resources are often limited, bootstrap. Bring a value proposition to the table and do more with less. It’ll help you in allocating resources at a later stage on the basis of skills rather than spending capacity.

Stealing scare

Founders may find themselves reluctant to share the prototype with the world until it is reasonably working but, in the process, lose out on feedback. Worried about creating competition, they do not democratise their knowledge avoiding the learning loop completely. Align your product launch time and delegate evenly. This will help build smooth channels of communications inside and outside the community.

Target audience issues

Without a specific user in mind and generalising the concept, reflects a lack of understanding of the problem. A surprising number of people believe their product is made for everyone, which may be the eventual goal, but preferably should not be your starting point. Hire key positions with expertise that can help you find your niche. Instead of replicating your competition’s model, find an audience that will be accustomed to your business needs.

The right area of focus

It’s far too common that founders with a sound tech background do not concern themselves with gathering business knowledge. People with a good grasp of marketing and acumen for business building are just as important as technically trained personnel. Not to mention, a start-up is not immune to legal challenges that are capable of bringing it down permanently. Avoid lapses in your ethics and know where to hold your horses. Make sure your product is ready to scale and is meeting the market needs.

Of burnouts and funds

Inspired founders, set out to be different. Getting out of the 9 to 5 grind sounds exciting until all your waking hours are about your work. Seeing a strenuous lifestyle, one might want to give up much before they expected to due to simply burning out. Distribute your time between work and life, it is not going to wait for you to come back to it. The only way to value your product is to value your time, let loose of the tight-fisted control.

It cannot be stressed enough how important it is to not let strategies backfire due to inexperience. Unruly attempts at cutting costs hurt the product and eventually the end consumers. Even when working through flexible methodologies, the design phase of the product is crucial. Jumping the gun without proper research on the customer needs gives the company a false start. Calculating the right price is a dark art to be mastered creating confusion on how to retain customers and bring in new ones. Sometimes, it all comes down to the product.

Not everyone needs to be hitting the ground running in every aspect. Founders like seeing growth but be mindful of what cost it is coming at. Do not let your assumptions blind you to the risks and remember, greatness is not destined but manifested with humility.