The Real Reasons Startups Fail to Start.


Failure to launch? What are the real reasons? Image

I have come across many articles (one as recent as last week) telling all of us the only reason we are not successful in business is down to us. The article I read last week was targeted at Entrepreneurs. The author believes quite strongly that there is absolutely no excuse for failure in starting up your business. He listed some “common excuses” business inclined folks give when businesses fail to launch.

Ok, here’s the slight irony, while I agree wholeheartedly with the fact that “we fail because we’ve told ourselves we’ve failed” , I am absolutely certain that external forces mostly beyond our control combine to make most startups fail to…. well… startup.

According to the author (name protected) of this article which I found quite interesting by the way, the most common reason given by Entrepreneurs for startup failure is the lack of funding. At that point, I wanted to scream. Make no mistake, lack of funding is REAL. It’s not an ‘excuse’, It is a legitimate reason for the launch failure and premature death of many startups. Lets get real, Entrepreneurs are rock stars (I wrote an article about that earlier) but we are not all geniuses equipped with all the natural talents under the sun – talents which can make you walk into any bank and come out with a loan or smooth enough to woo a panel of investors to put their money into your project.

Some of us are just regular folks with regular problems, regular credit reports –  meaning regular debts. And with regular debts, no bank, particularly after the last recession will lend money to any individual to service an untested project. The ones willing to lend will ask you to ‘show some commitment’ by providing anything from 10% to 25% collateral and capital. Where these banks expect to see startup show up with that amount of money as collateral beats the hell out of me. Loan providers that waive these ridiculous collateral have steeper interest rates which simply mean you are already in debt before your business starts. Throw all these in the mix and tell me how someone could say an Entrepreneur’s reason for pulling out of a startup is illegitimate.

Then comes the 2nd most common reason – lack of support. I will say it till I am blue in the face, I have met innovators that are quite simply BRILLIANT but have absolutely no clue what to do with their inventions or business ideas. It happens! When you look at business moguls these days, if the most successful ones didn’t know where to take their invention, they knew when to sell their invention, if they didn’t, they knew how to sell their invention (or themselves) Some Entrepreneurs do not possess those set of skills or the confidence to match. This is the job of business mentors, but how do you find them?

We live in such a cynical world these days that the risk of intellectual property theft is clear and present. If you are not thinking about it, someone out there is ready to steal from you. Another irony is this – those who have the time or energy to mentor you and your business idea with all good intent and purposes might not have the expertise to break your startup into the big time; those that have the contacts and experience to break you into the big time do not have the time or energy to mentor you, except of course you are willing to pay for their services. Ah, the money issue again.

Another ‘excuse’ for startups failure to launch is red tape (an idiom that refers to excessive regulation on the part of governments) Consider this, I know 2 female entrepreneurs who worked really hard on a product – home-made jam, chutney and mulled wine. They did their market research the very hard way, standing outside in the cold winter selling their product, and people came in droves to buy. The next logical step of course was to make a proper business out of it, formalise what needs formalising, get a sales outlet ( a shop) and sell these fantastic products to willing buyers.

They didn’t have the money upscale, but found a mentor through a popular start-up loan service provider. By the time they had been able to analyse what was needed to actually go into full-time production, it wasn’t worth starting, which was a shame because that business would have been a hit in the community. They needed more than 4 licences between them, and an unbelievable obstacle course of rigours and procedure that was so ridiculous it made the whole process worthless. Oh, by the way, the would-be startup costs was in excess of over £20k. For home-made Chutney and jam?? Yes, seriously!!

The above scenario is a classic case of bureaucratic complexities that border on lack of common sense. This is experienced everyday by Entrepreneurs. Some of these Entrepreneurs have the most brilliant business ideas but the moment these bureaucratic forces combine, the idea dies before it launches, or dies immediately after launch.

I do enjoy reading self-help publications helpful to anyone willing to start a business, but I found this particular article (and every similar one) very hard to swallow. I feel the author wanted to write, just for the sake of writing. Most people who want to go into business do that knowing the risks and challenges involved in starting one, however, many simply do not succeed in starting up due to the reasons listed above. It is unfortunate for these reasons to be termed as excuses. They are not excuses. They are just obstacles that are too complex to surmount sometimes.

The only thing I will agree with is that regardless of these complexities, Entrepreneurs must always, ALWAYS be resilient. The most successful business people today took a risk, took an opportunity but didn’t take NO for an answer. What I am trying to say is very simple, in your startup journey, you will encounter a lot of challenges, some of them will be difficult for you to overcome, some of them will be impossible to overcome but keep going at it, never give up and DO NOT STOP at the first  (2nd  or  3rd) hurdle because eventually you will get into the realm of success. 

If someone tells me that, I will agree TOTALLY.

Kole Obasa

2 thoughts on “The Real Reasons Startups Fail to Start.

  1. Great! I love the last paragraph, regardless of all real life situations and obstacles, go ahead and start up your business /dream, my advice “start small” do your best to start with what you have and those around you… @ Kole real piece, nice points. Well done.

  2. Good Morning, Kole

    Any proposed business ventures carries risks but only opt for those that are calculated ones so that chances of failure are lessened. If you’ve convinced yourself that you are on the right track then go do it!

    Initially keep everything on a tight rein and live and operate in a miserly manner to keep running cost to the bear minimum and that includes start up finance loan and repayments. Yes the road is very bumpy in the earlier stages and you’ll take some hard knocks but determination and tenacity are the key qualities you need which will fortify you in your quest to drive your business forward. If you have the will-power there is usually a way to surmount the inevitable business problems that will crop up from time to time.

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