MANAGING in the

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Start-Ups

There could be several reasons behind the eventual failures of even successful start-ups. A commonly cited such reason is having a static business model, without the managerial capacity to move on with the times. Another is having limited reserves to buttress economic shocks and downward cycles. Conversely, an inability to scale up during successful periods can prove to be equally harmful. Proactive investment must be done to foresee such trends such as by upgrading infrastructure or IT networks. Having the wrong people in the board of directors can be a recipe to failure. Sometimes in order to succeed at talent recruitment, not possessing the brand name of bigger companies, start-ups are coerced to overcompensate. This must be avoided at all costs. At times, the leader gets outgrown by the company itself leading to an abyss at the very top. Start-ups must also avoid getting too dependent on any one customer or segment believing this would last forever.

Source:http://innovationexcellence.com/blog/2017/06/25/top-7-reasons-your-successful-startup-will-fail/

Uploaded Date:05/07/2017

In a recent case, a startup founder went all the way and returned the money to one of the major investors due to differences in political stance. This is a rare incidence but not unheard of. At Instagram for example, one of the investors had backed the startup at a time when the company was into a much more basic check-in service. Later when Instagram emerged in its present day avatar, the same investor did not ask for money back, but simply refused to invest further. Whenever such cases of firing investors take place, it is due to one of two commonly cited reasons. One is when the startup loses money but still has some left in the bank, so it is returned to minimize investors’ losses as a measure of goodwill. The other is when companies change track and diversify into something else, so original investors are given such a chance to reassess. One such case of a pivot was with Next-door which had started out as Fan-base before a business innovation saw the model change. But such cases are rare due to the fact that all the key stakeholders need to agree on such terms.

Source:http://fortune.com/2017/03/30/startups-divest-investors/

Uploaded Date:02/06/2017

As per data provided by the US Small Business Administration, half the startups that began in 2011 have already died down while about twenty percent of those founded in 2014 did not even complete a year. A lot of MBA students wrongly assume that disruptive technology is the only way forward for a startup to thrive. There are several reasons why a startup may not survive. The most common factor as provided post business analytics done by CB Insights is that they do not serve any existing market need. Another major reason is the fact that they quickly run out of funds. Their cash flow models are not efficiently run, and not every startup gets a handsome seed fund to begin with. The inability to assemble together a proper team is the third common reason for failure cited. Another is excessive competition. When one startup does well in any field, or any idea catches up, several others try to pounce in, often with limited results. Finally, it has been observed that startups wind up due to pricing issues. This is different from funding as a lot of new business entrants keep entry prices lower than market rate to attract projects. These get unsustainable in the long run.

Source:https://www.forbes.com/sites/sageworks/2017/05/14/why-startups-fail-and-how-to-avoid-failure/#2964ae19a3b9

Uploaded Date: 20th May 2017

A lot of youngsters are more open these days to working for startups instead of large established corporations. Thus startups must also plan early on how to get the best of talent and then create a pipeline for the same. Proper talent management systems must be created right from the outset. The recruitment must be done with clear set timelines, rather than just thinking of surviving the day or the business quarter. An assessment must be made of the skills the recruiter is looking for. For youngsters looking to grow, a startup can at times be a hurdle, so clear growth paths must be designed. A mistake lot of company founders commit is to recruit people who have similar personalities to themselves. Instead people with complementary skills must be selected to complete the organization and help it grow beyond the founder’s vision alone. At times, the pipeline will need to get pruned as a lot of non-performers will also exist. Unlike the luxury of any established firms, startups must without delay execute this function.

Source:https://www.forbes.com/sites/roncarucci/2017/05/09/how-to-scale-your-startup-with-the-best-talent/#705564753a05

Uploaded Date: 16th May 2017

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