Many startups are failing in India. Why and What are the common mistakes a startup does that it fails has become a big question. Read on till the end and find out why.
Did you ever grow a plant? The growth of a seed to a plant takes a lot of attention, care, time, patience. Same with a newborn baby, we need to be so careful in the initial ages.
For an entrepreneur, a startup is like a baby and that person becomes a founder. So many responsibilities and entering a new market can be tough. There are so many startups in the market but only a few succeed.
Why do startups fail in a country like India? Everyone makes mistakes and nobody is perfect but some mistakes can shut a company. Here are a few common mistakes a startup makes.
Read on a few statistics of Startup Fails by News18.
Common Startup Mistakes
Lack of Planning and Preparation
Before starting anything we plan, we prepare for it. It’s a very basic and simplest thing everyone needs to follow. An entrepreneur should have a clear vision and understanding of the idea for the startup. Many of them don’t plan in a way that the company is for the long term so the plan and preparation are so important as it is the foundation of the startup.
Misunderstanding of Market
If anyone is starting a company it is evident that they are going to enter the market and understanding the Indian Market is so important. One has to know how the market works and this isn’t like just reading a book. Constant work or analysis is required because the market is uncertain and one has to predict the future correctly to sustain.
Improper Business Model
A startup’s business model should be airtight. The product, service, delivery, chain of command, strategies, funds, sources of finance, target audience or customers are the main elements in a company. So all the elements should be considered while planning and implementation. Even if one element goes wrong the entire business model can fail.
Lack of confidence and innovation
We have seen a lot of companies successful in the Indian market but how many of them are originated from India? All those are just a branch or franchise of foreign companies. Indian’s are skilled, talented people but they lack the confidence to face the market and be innovative at the same time. Startup ideas have to be implemented at the correct time otherwise somebody else will do it first and take over the market.
Conflict in Management Team
Management plays a strong role and having conflict will break down not just relations but the company. The conflict can occur with not being on the same page, clash of ideas, who takes what role in the company. They may be multiple founders of a company but the only one can become the CEO. Everyone should know their roles properly and if the work is mediocre then even a management person has to let go.
Not utilizing the new technology
Technology makes things easy. A company should use the latest technology unless it is a competitor company product. A product or service will have a lot of factors and new technology should be incorporated. What if a customer wants to buy the latest Dell Laptop released this year but the processing chip is Intel i3 version? It isn’t in 2010. Times change and so the technology.
A startup cannot run for the long run if only the founder keeps working alone all by him/herself. The founder has to build and grow the company and require skilled personnel. Having a management team, hiring employees should be done at the right time. The management team comes first and it’s very important to hire the employees at the perfect time. If the company hires employees at a very early stage it could be a risk and there will be a shortage of money. One has to hire employees when there is a capacity to pay for them.
No SWOT analysis
SWOT is a kind of basic thing we all learn for our personal life also. Knowing your Strengths, working on your Weakness, looking out for Opportunities, and keeping an eye on the Threats is an analysis everyone should do. Being unaware and ignoring the weakness will reflect on the company’s performance.
Competitor and Target Audience Research
This is the simplest mistake by the startups. The competitor analysis and search of the target audience have to be done at the planning stage. One has to know who is in the market and how the competitor is running. Understanding and targeting the customers is a little tough but narrowing down the customers in the planning stage is essential. Time to time the company has to understand the demands of the customers, get feedback, and work on improving the product every day will sustain a company longer. Being rigid and not understanding the customers can become the biggest reason for failure.
Improper Distribution of Funds
Getting funds for the startup is a hard task. So, if the funds are distributed in the wrong way till cannot be readjusted. It’s a mistake startup entrepreneurs do because many don’t understand finances which can lead to no cash inflows, less inventory. Entrepreneurs should know where to spend, how much to spend, and how much to save.
Some more common mistakes are neglecting legal terms, not using marketing techniques, being unorganized, and not being ready for uncertain situations.
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Well, these mistakes are very common and many of them occur at the initial stages of the startup. So, the foundation should be strong enough to run for the long run.