What Kills a Start up in first year of Operations?

I am a part of many forums on Internet where proven entrepreneurs, aspiring start up owners and the ones looking to join the game review problems and answer queries of business owners hungry for a genuine feedback. Those who excel remain to sing the songs of their success over numerous start up story blogs, (I do that for my readers too :D ) and others make a quiet exit (most of the times). Well this time around I thought of writing about the ones who somehow explain the cause and reasons behind their start up boldly going off the turf!!

What Kills a Start up in first year of Operations

What Kills a Start up in first year of Operations?

 

Moreover concentrating on India, we put a bar of 1 year of profitable operations for a start up guy to really become an entrepreneur from a self employed enthusiast. There are numerous factors that affect the overall life cycle in first year.

Lack of funds 6 month down the line

 

Bootstrapped ventures form a major part of ever growing start ups in India. Our will power sometimes grows over the reality and makes us take a leap of faith and move forward. Basically we move forward as a one man self employed army to building a team and hence realizing the cycle of demand- supply- referral.  Everything moves smoothly unless there’s a delay in the payment from the client or that couch you bought last month felt a little heavy on your pocket. Uncle Sam went out on a Bangkok vacation or may be you’ve delayed that credit card payment a couple of uncomfortable months and now its time to shift priority from building the dream company to paying pending bills. It may be lesser than 6 months or may be 10 but start ups tend to feel the heat when there is no reserve cash in hand 6 months down the line. There is nothing to loose except fro the precious time when a bootstrapped cum cash strapped start up fails, but leaves a pile of learning.

We solved a problem which bothered very few!

 

This has been emphasized over a number of times now. While starting up, we believe that our solution would certainly change the world and yes it does too!! But for a very few people have the problem or connect with the solution to be a problem solver for them. this could also be an outcome of pricing paralysis where the start up fails to price the products appropriately and beams it at inappropriate segment.

Inappropriate pricing of products

 

This is a self raised demon for a start up in the first year of operations. I’ll share my own experience here. I wrote a very detailed proposal to build a e-comm portal for a client we handled social media and content for. I was into customer satisfaction quite religiously when I almost priced the product at almost one third of what should have been!! Thumbs up to the early days of learning that the project ran for almost 4 months and I got resource drained over this project at one third of the genuine price it could fetch. Impact: I had to slow down the growth, cancel the recruitment plan for another resource that I had planned to hire and train to speed up the same. Yes I failed to plan and priced the product that costed me more than the I charged client. May be I had some Karma build up around that the same client showered some more work and we could average.

No Buffer Time in Decision Making

 

Young mind curating a startup is as attractive to the market as a young resource to an MNC. They all want to leverage you for their good. This is the time when you’ll get a lot of offers to partner and reap benefits of their long term presence in the market and experience, but trust me, this is the time to choose carefully. Maintain a buffer zone of a couple of days around you which saves you from making foolish commitments. Always take time to think, analyze, consult with your mentors and make a sound decision. Buffer time in decision making is very important.

There are a couple more things which we commonly or uncommonly commit and get our start ups killed in the first year of operations which I’ll definitely take up in another post by the weekend, which is the time I’ll take to recollect some of my own holy lessons that I carry along.

I would love to hear from you in comments how do you feel about it.

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Anuj Sharma

Founder at Omex MEdiaTech
I am based out of Shimla. I am the founder/writer/editor at Twalkitout.com. Writing is my passion, and a part of my livelihood. I started writing here almost 2 years ago and couldn't stop ever!! Apart from Twalkitout, I run a Digital Marketing and consulting firm named Omex MediaTech out of Shimla.