I have seen quite a number of startups that did not last long enough. Most of them may have started out quite alright. Being new in the business, the enthusiasm among these novice entrepreneurs is truly astounding. However, being too much caught up with the thought of having the need to achieve faster growth in the business, what might have been the reality of a dream suddenly goes south. Why?
Here are why some startups easily rise up and fall:
1. An entrepreneur may have seen an opportunity to penetrate the market for reasons like there is hype for a certain kind of business. Replicating these is a chance to conquer the market in some way or another. Since the business started out as hype, it may just last for a few months, and when new products or technology has been introduced, the market naturally shifts to the newer ones.
2. The need for speeding up growth would require an entrepreneur to either add capital to his business using his own money or encourage others to invest in their business. While these are normally seen when a business aims to expand, being too early to go towards that direction could just make their business crash and burn. You see, it needs a lot of planning to make this very crucial step. And if done in haste, most often than not, the business fails.
3. When others see your success with your startup and have witnessed how it was easy for you to attract customers during the early stages of the business, a number of aspiring entrepreneurs may desire to start with their own business similar to yours. And we know that having a large number of similar businesses may force you to decrease your prices since you would still want to become competitive. If you used to conquer that seat of success for quite some time and lots of entrepreneurs follow suit, then your income may be affected, sometimes to the point of almost just breaking even.
4. A saturated market means that the revenue of similar businesses has become divided. Therefore, in order to again gain momentum in the business, an entrepreneur must find ways on how to strategically gain the trust of his customers. Massive marketing efforts should be on the line, otherwise, you would just be wasting all the time and resources that you have invested in your business.
5. With the growth of the business, this would also mean the increase of personnel. Competent workers may become short in supply. And probably due to insufficient time to train these employees and the urgent need to have them on board, not everyone may have been fully aware of their duties and responsibilities in the company. It is like just telling Employee A to do this and that while saying the same thing to Employee B without much thought that there might be other tasks that are left undone. Therefore, not being able to provide complete positive customer satisfaction would just turn the business to bust.
6. The rapid growth of the business would also require senior specialists and a better system to create a smooth sailing business. But then, some would have entrepreneurs would have chosen to stick with the people and kind of system that they have started with that it would cause failure in the organization process of the business. Again, the business will surely crash and burn.
7. With the rapid increase in the number of people working for the business, this would be quite a number of differences in terms of principles and beliefs. And quite frankly, this is a common problem among most businesses. Not unless you hire people who share the same vision as yours and believe in your plans, then the business would just fail.
8. Entrepreneurs, seeing the colossal opportunity of earning more may have skipped some legal and rightful paths to avoid disruption in the business. Of course, an entrepreneur is expected to abide by the law all the time. And not just because a competitor may have told an authority regarding how irresponsible the entrepreneur has become, not being true to your customers and the lack of abiding by the state policies can immediately shut down your business.
9. When investors start seeing the decline in sales due to the factors mentioned above, an entrepreneur should be prepared for the “big reveal” that the investors will have during the next meeting. No investor would want to waste any centavo more if he sees that the business is slowly dying. And with that said, to run the business with just your sole capital running may not be sufficient enough to hold the business for too long……unless you start thinking of selling the business for good.
How do you put a brake on too much rapid growth? Learn to take things slow and check on how the market accepts your business. I know that there is a need to earn more, however, to speed up your growth in such a short time make just lead you in the opposite direction. Plan wisely. Ensure that your product/s fit the market perfectly. And as much as possible, never rely on what is just the “in thing” because surely, it would come to a point where these products would be no longer of importance. Consumers have become wiser. Therefore, prepare to offer them products and services that will always answer their needs. And your aim should be for the long-term.
To become over-confident in taking that giant leap to grow your business may not be the best thing. Remember, that not every company is destined to become a fast-growing company.
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You may contact Armando “Butz” Bartolome for questions and more information.
By email: aob@gmb.ph
FB Page: Armando Bartolome
Linkedin: https://www.linkedin.com/in/franguru/
Website: https://www.gmb.ph
