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What is the difference between a simple business model and the startup ecosystem and where are today’s startups failing?
COUNTING THE COST
More than 100 million startups are created every year. That’s about three every second. 92 per cent of them fail in the first three years. To understand why it happens we need to check the results in operational outcomes. Many startup founders fail to delegate and outsource processes leading to certain death.
Startups need founders. They don’t need managers, these roles are better suited to the corporate world where the business model is proven and they need operative functions. A startup is a transitional entity in search of a scalable, repeatable, profitable business model. It’s a journey of enquiry and constant adjustment. And that journey needs a leader — someone with the passion, drive and energy to lead and inspire a team. Founders are important because they create a shared vision and articulate a clear mission — and they usually embody that vision. No one will be as passionate or enthusiastic about what a startup is trying to achieve as its founder. A startup is usually birthed by a founder trying to scratch an itch or solve a problem they care about. That is why it is usually a huge mistake for boards and investors to throw out founders. Even though it is a mistake that boards and venture capitalists often make.
IDEAS ARE CHEAP!
The difference between successful and unsuccessful founders comes down to this: successful founders turn their great idea into a desirable value proposition and then into a viable business model. When you understand the need to have a process to take your ideas through to a solid business proposition, you will stand out from the crowd of wantrepreneurs who are bandy about ideas and little else.
Another concept startups need to understand is scaling. I see too many startups fail because they scale too early. One consideration is cost scaling. Most people think of scaling as just going out and hiring 30 people. Money starts coming in and they rush to scale by moving into bigger offices. They think scale is about the size of the cost base. This is a huge misunderstanding. There’s no point in hiring 20 salespeople if the customer delivery won’t scale.
Being physically, mentally and emotionally ready as a founder is critically important. Long experience has taught me that an incredible amount of stress is placed on founders. If you’re not physically and mentally ready for it, it can have a horrible personal impact. Insomnia, depression, anger, lashing out at others — if you’re not ready for the pressure, the process of founding and operating a startup is going to suck. As a founder, you are normally focused on your product, your business model, your team, the competition — everything but yourself. With 270 other things on your to-do list, reviewing your own strengths and weaknesses is usually the last thing on your mind.
Several obstacles can prevent you from starting a successful business. It’s important to be careful with obstacles and look for strategic ways to overcome them.
Outsourcing your needs can be a tactical way to approach developing a startup without having to be overly stressed. Having outsourced teams can also reduce risks and save your wallet.
StartUp Advisory has highly skilled professionals available to you. These consultants have been through a background and training check and are deeply invested in helping your startup see the light.
Learn more today!
by the team of