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Started by : Sudeep Tarafdar, Senior Consultant, IBM   07 16 2010 11:15:47 +0000
Industry : Hedge Funds/VCs/Private EquityFunctional Area : India(Markets)
Activity:  60 views;  last activity : 01 11 2011 16:46:27 +0000

When someone asked me what made startups fail??  After standing there gaping for a few seconds I realized this was kind of a trick question. It's equivalent to asking how to make a startup succeed—if you avoid every cause of failure, you succeed—and that's too big a question to answer on the fly. 

http://embracingmyjourney.com/wp-content/uploads/2010/02/business-failure.jpg

You don't know untill you experience those things by yourself. so, let us create this thread for all of us who are into start-ups or are into creating one. So that it can help others in this regard. What are the 10 things that will kill your start-up??

 
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1 2 3 4 5
1 Spending Too Much
2 Choosing the Wrong Platform
3 FAILING TO PLAN IS PLANNING TO FAIL
4 Your bad luck ... And your inability to retreat ..
5 Loosing patients.....
6 How much is too much is the question.
7 Not doing Ground work Properly
8 Lack of Perseverance
9 Insufficient working capital
10 Wrong Market

Spending Too Much

idea posted by Sudeep Tarafdar Senior Consultant, IBM

It's hard to distinguish spending too much from raising too little. If you run out of money, you could say either was the cause. The only way to decide which to call it is by comparison with other startups. If you raised 50 lakhs and ran out of money, you probably spent too much.

The classic way to burn through cash is by hiring a lot of people. This bites you twice: in addition to increasing your costs, it slows you down—so money that's getting consumed faster has to last longer.  There are two general suggestions about hiring: (a) don't do it if you can avoid it, (b) pay people with equity rather than salary, not just to save money, but because you want the kind of people who are committed enough to prefer that.

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by Rathin Deb, Freelance Retail Consultant  | 07 21 2010 08:48:09 +0000

I agree with you Sudip. Remember when Mukesh Ambani decided to go for retail business first thing he did was kept a budget of 100 crore of rupees for the employee and he did all ther cost calculation and once the team was in place he asked for a roadmap with expense. The same has been given he was having the same calculations in mind and gave a go ahead. Today they are earning profits.

So one should calculate each and everything before the start up operation including all the spendings and go as per that. In that case the enterprenure will not end up spending more. In start up the investment is actually 3 times the normal expense and that is the reason the breakeven comes only after two years of start up and one should take this into consideration otherwise in one place or the other he will spend more and probably stop there.

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Choosing the Wrong Platform

idea posted by sumitra dutta Consultant, XYZ

A related problem is choosing the wrong platform. For example, I think a lot of startups during the Bubble killed themselves by deciding to build server-based applications on Windows. Hotmail was still running on FreeBSD for years after Microsoft bought it, presumably because Windows couldn't handle the load. If Hotmail's founders had chosen to use Windows, they would have been swamped.

Platform is a vague word. It could mean an operating system, or a programming language, or a "framework" built on top of a programming language. It implies something that both supports and limits, like the foundation of a house.  So, many go wrong here and kill their ventures by choosing a wrong platform.

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FAILING TO PLAN IS PLANNING TO FAIL

idea posted by s.baalu Consultant, XYZ LTD

IMPROPER PLANNING OR IMPROPER EXECUTION WILL LEAD TO FAILURE.INADEQUATE ENDURANCE WILL AGGRAVATE THE SITUATION

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It’s all about planning but strategic planning that is. I also agree with S.Baalu. Failing to plan is planning to fail. Once you develop your strategic plans then everything else will fall into place. All startups and current companies need proper planning especially strategic planning. Planning gives you the direction, guidance and focus that you need. Without proper direction, you and your business are going nowhere.

A business of any size needs strategic planning, business planning, risk management, development planning etc… Planning helps to set a stable foundation for a business or project. Without a stable foundation a business can crumble. As I stated before: It’s all about strategic planning. A business needs strategic planning, strategic management and dedicated implementation.

~~Get Strategic Planning Consulting Services:

You can get strategic planning services and consulting from the Clerical Business Solutions Company. Clerical Business Solutions specializes in strategic planning, business management and development. For your business needs contact Clerical Business Solutions Today!!!

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Your bad luck ... And your inability to retreat ..

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Loosing patients.....

idea posted by Shanmugasundaram CEO/MD/Director, Safnnite Solutions India Pvt.Ltd

While starting up's..delay will cause..In hat situation,loosing patients also will disturb the business.

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How much is too much is the question.

idea posted by VIDAYA ANAND SARASWATHI Test Manager, TCL India
Which is again debatable. So, whenever anybody starts something, then they will have an idea or bunch of ideas and they discuss/plan for the same. It is different that, some may fail! But they gain experience with it. So planning becomes most important whether it is choosing platform or allocating funds. Everybody cannot be expert in fund allocation/planning and at the same time technical geek! Get ideas - discuss well with friends - other geeks/experts before u start. Don't ever regret for what u have done. U may loose time, money but will gain experience :) Be a good listner and judge yourself for short term and long term goals. Do not start anything without clear plan.
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Not doing Ground work Properly

idea posted by CHINTAN Security/ Equity Research Analyst, chintaninc

As said u have to first ask yourself what can go wrong and then remove those which can be hurdles and u will be successful.

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I think this is the main reason. Rest of the factors attribute from this only.

Thanks,

Vinay

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Lack of Perseverance

idea posted by Roby Daniel Director, Let's Go Travel

Incomplete background info in the beginning (which in most small-budget cases can't be helped) - lack of proper financial planning/foresight - lack of Plan Bs contribute to failures. All those things are in the game and has to be dealt with gradually, as we learn more and gain experience. But what finishes it all off is the lack of the will to hold on during real downs.(although it's debatable as to till wen we shud hold on ;)

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Insufficient working capital

idea posted by Om Deshpande Business Consultant, JobsXS

Insufficient working capital is one of the main reasons for start up failures. Before starting up it is always wise to plan working capital for at least 2 years. However good the business idea is, there will always be ups and downs in cash flow initially, so there always needs to be sufficient working capital to support the lean periods.

Regards,

Om Deshpande

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Wrong Market

idea posted by Anupam Pandey Asst. Manager/Manager (Technical), Indian Air Force
If you don t choose right market for your start-up its doomed to kill.
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