As we march ahead to build a new India, we should celebrate the spirit of entrepreneurship and innovation that drives individuals to embark on an adventure like no other. As someone who has been on this roller-coaster ride for 15 years, I have seen numerous startups kick-off with aplomb and fail miserably. Why do startups fail? That’s the million-dollar question. While each business failure can be attributed to unique causes, I believe, fundamentally, there are five basic reasons that spell doom for any entrepreneurship. Not the right product In more than 90 per cent of the cases, startups fail due to wrong product or service offerings. Many entrepreneurs try to offer ‘me-too’ products or services that are destined to fail. In other cases, the market may not be ready for the product or service. I realised that after the failure of my maiden entrepreneurship effort – an online used car portal that I launched while working in Saudi several years ago. Poor cash flow management Every entrepreneur dreams of building an Amazon or Apple, but few have the financial discipline to make it a reality. It takes more than business acumen to script a startup success story. One of my professors had this beautiful analogy of the rat and the elephant. While the rat, by virtue of his sneaky nature, manages to cut corners, the elephant is transparent and straightforward in his endeavours. As entrepreneurs, we need to ask ourselves: Would we like to be a rat or an elephant? People issues Quite a few entrepreneurs, especially first-timers, underestimate the power of having the right people on their team. Partners or senior management team members, who are on the same wavelength, are instrumental to the success of a business. Ask any successful entrepreneur and s/he will tell you the importance of investing in the right human resources. In the case of startups, the experience or maturity level of promoters is also of paramount importance. Lack of focus Ambition is a great thing. However, when startups try too many things at the same time, they are asking for disaster. Focus is the key. Business evolution needs to be focussed and strategic. There’s little room for dubious, grandiose yearnings. Perseverance deficiency Rome was not built in a day, goes the popular adage. I can assure you that neither were any successful businesses. As an entrepreneur, you need to have immense perseverance and patience. The idea is not to fear failure, but to learn from each let-down. And emerge stronger and smarter.
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