We are witnessing a rapidly changing world of technology which has attracted a large number of startups. The allure to launch a tech startup is easy to understand, especially when this industry is attracting large number of investors and venture capitalists year on year.
However, journey for a tech startup in not an easy task. It faces many daunting challenges, right from the time when it is just an idea on paper to a full-fledged company that can stand on its own. Sometimes I feel it’s like starting a marriage. At first, everybody seems to be in a dreamland, with a vision to change the world, having great fun and counting profits. But all too soon, reality strikes, product development is stuck at that 90 percent mark, a key person leaves, and customers are talking but not buying.
According to me these are some of the top reasons, because of which a startup could possibly fail.
Reason 1: Defining the problem statement
It is very important for product startups to know what they want to build but it is even more important to know what they don’t want to build. The main reason why companies fail is because; they do not define the problem statement at the beginning. As a result they run into the problem where they build a product for which either there is very little or no market. Not defining the problem statement will affect the company in loosing that compelling value proposition, which ultimately create an impact on loss of revenue. .
Reason 2: Product engineering challenges
Product development is a difficult task especially when a startup acquires its first customer. It is even tougher to manage implementation challenges, bug-fixing issues and developing new features; all at the same time. Primarily this can be due to lack of well-established product engineering processes and execution methodologies or strategic problems.
Reason 3: Constant change
Rapidly changing technology is surely a show stopper for most of the startups especially in technology industry. Lot of entrepreneurs i know, are feeling the pressure of moving quickly and beating the competition to provide an efficient and effective solution to their end customer. This rapidly changing technology has made the opportunity window so small that if your startup is not agile enough to respond to customer pain areas, your product will be dead before hitting the market.
But just being first will also not help. Launching a whole new product for the first time in the market will not guarantee you the success. If a product or service doesn’t yet exist, there is a fair change that companies may have to pay a steep price to blaze the new trail, and oftentimes, the second mover capitalize on that. To better evaluate the situation, tech startups should always seek feedback on their ideas, goals and path to success.
Reason 4: Hiring
Hiring quality resources is a nerve-wracking experience for any startup. Sometimes they run into a catch-22 situation, they do not have quality resource hence they cannot build quality products; and they do not have quality products hence they cannot attract quality resources. However quite often we have observed that tech startups hire too many people before they’re really ready. Even if you have good funding behind you, stretching your resources too thin can become a problem for you soon.
However a tech startup face steeper competition than startups in other industries, I feel the chances to be successful, entirely depends on your level of dedication to your new business.
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Anupam Bhide | Calsoft Inc.