Your startup started well, it was a brilliant concept.. What Happened?

“Today we sent the final communication to our remaining set of employees, on our decisions to close the company. We had a fabulous few years of business, however could not covert the initial success to sustainable business”

I can only wish the readers that they don’t come across to a juncture where they experience such incident either as employee or employer. However, the harsh reality is this that 80% of startup’s fail to make their concept a reality and more sadly few of them after having initial euphoria of success, fail to translate it into a self-sustaining business.

The web is full of various factors which leads to start up failures, right from Concept flaws, Product / Services offering issues, misplaced target market, financial crisis etc. They are all important aspects and probably the top most reasons why a startup fails, however my intent to write this post is on more specific aspects of failures, considering basics of the business was correct, still the outcomes were undesirable.

There are two buckets under which various aspects of failure can be aligned a) internal b) external and in this post I would deliberately put more emphasis on internal issues, as they can be better controlled by individuals and sometime mitigating the internal challenges helps in countering the external issues which are thrown at them.

This post on prima facie looks to be a non-healthcare topic; however in my views at company / organizational level , the larger issues remain same irrespective of business of the company. And my attempt is to compile the most sensitive issues which leads failures across sectors, so that people who are in healthcare business have the visibility and can learn from mistakes others have done.

1. Inability of promoters to share their vision with team members correctly

Sadly this one is the simplest, yet most prevalent reason for the failure of the startup’s. I have seen brilliant concepts and credible people failing to share the larger purpose and concept of the business to the people who are working with them. The results are quite dramatic, as the internal environment gets into a viscous cycle, where passion of promoter to create value is misunderstood as merely growing the business / increasing the sales. People trying to match the expectation of the their boss start taking shortcuts, which leads to stunted value transfer to the customer and what happens after that is easiest thing to guess.

Let’s be clear, your concept is your baby and please don’t rely entirely on people to understand it and be proactive to take right steps in getting the goals which you have set. Identification of concept and starting the company is just 25% of the job done, rest of the success lies in how efficiently you transfer your knowledge to your team mates.

It usually takes around 11/2 to 2 years for conceptualize an idea and you must have had many sleepless nights and have been ruminating the concept since long, hence it would take significantly time for your team to understand and digest the wealth of information you have created. Spend some quality time and help your team to evolve over time!

2. 10% of employees presumed to be performing 90% of the job

There are three underlines in the above statement and please read them carefully. I think this scenario is common in most of the companies and more relevant in Indian context, where there are fewer percentage of employees which are seen to be performing most of the jobs. My earlier understanding was that, there must be scarcity of quality people and probably this is percentage of people who actually have some ability to execute. But just take a pause and think again, if this is really true? Have we not seen same people performing better when they change their jobs or departments or via se versa. If yes, then what has changed?

In my view it is more related with effectiveness of leadership to work in a team, they either work with people who quickly adapt to their “Style” of working or leaders are not able to work effectively with large team sizes. Whichever be the case, it’s the company which suffers ultimately and been an entrepreneur, it means you!

I have underlined the word “presumed” for this reason only, it’s not practically possible for fraction of people to deliver most of the job, what this really means that small fraction of the people actually get credit for all the job well done! And it is next to impossible for a startup to survive if it has large share of dissatisfied employees.

3. Solitary Hunters: Absence of coordination: “You may go fast alone, but to go further you will have to go together”

We all love to fast! We want to see the work executed at rapidly and followed by desired outcomes

I can only hope this can be a reality for everyone; however fact of the matter is, real world comes with hurdles, challenges, friction which slows the process down and being a startup you need to understand it more than your business concept.

Let me also confess openly, there are very few people who have the qualities to bring people together and for most of us we need to learn it. This acquired learning is also not unachievable task, one of the most important aspects is to change our mind set. We need to accept the challenges of the real world and still remain committed to bring the change by “inclusive growth” through people’s participation at every step.

We need to accept two aspects of a successful company a) the success of a company is directly proportional to “Level of Organization” and “Culture”. b) An organization is synonym of an engine, which can only work if all the parts are working in tandem and even a minute screw has same importance as of any large part, as it is there for a purpose which only he can deliver.

4. Cash flow??? What is that, I just need to focus on ROI.

The understanding of cash flows is not only your CA’s job, it has got more relevance to the promoters. There may be a scenario where in next 3-4 years you get decent ROI, but the larger question is will you survive till then.? You would need to make sure the business growth is in tune with your cash flows. We may wish to expand rapidly, start hiring on big scale but all of these come at a cost and there is no one else but your company to pay.

Please be very careful about your fixed costs because you are running a company and there is no space for gambling.

I have seen many established firms going wrong on this front by investing / expanding without proper due diligence and hence failing. The last thing you want in a company to delay the salaries and payment to vendors, it’s very hard to come out clean once you get in this virtuous cycle .

I do not intend to discourage people from experimenting, but you need to make sure you took a calculated risk and did not over do it!

5. Absence of Long Term plans

I have hardly seen a dearth of people in joining a startup, but always seen them struggling in retaining them and it’s not rocket science to understand that why people remain committed to an organization.

People stay with company if they experience growth in all spheres of professional life and remuneration is just one aspect of it. When people join a startup they come with a mind set to be a part of story which you are creating and please make sure there is a chapter for every one on your epic story.

I am keeping this segment short; as I am sure every one of you can relate with topic more than any other, hence would be expert in understanding it. My attempt was just to underline it again!

6. What to achieve next? Where the passion gone?

When I started to pen down on this segment, one name just occupied my senses. The name is Sergey Bubka , sound familiar? Incase not, let me give his brief profile…

He was a pole valter, who broke world record for 35 times… yes 35 times, and more importantly majority of times, it was his own records which he was breaking. He kept on improving his performance for over the years, until he became the first person to jump 6.15 m. He was gold medalist for consecutive 6 times in a row over 14 years. His records were unbeaten for 21 years, until recently Renaud Lavillenie crossed 6.16 in Feb 2014. He was known as athlete with only one competitor and that was he himself.

Gosh… I had many goose bumps while writing about him, I hope you also feel the same

The point is, in dictionary of successful people, there is no single destination, on reaching to one point they simply start looking to another destination with same passion as if they just started the journey. The promoters of startup should restrain themselves from feeling of “they have arrived”.

Even the large, well established company’s fear from startup from one thing that is “Passion” which can bring disruptive business models, because they know these free radicals have enormous energy stored in them which can bring the mammoth down.

"If passion drives you, let reason hold the reins." - Benjamin Franklin

"I have no special talents. I am only passionately curious." -Albert Einstein

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