Entrepreneurs are, by necessity, highly resilient professionals. Initiating a business venture and driving it forward demands a great capacity for addressing difficulties and overcoming tough moments. In fact, data indicates that 9 out of 10 start-ups are destined to fail. This is a sobering but useful fact to bear in mind when embarking on a new project because realism should go hand in hand with creativity and enthusiasm.
The experts state that the reasons behind this high failure rate are identifiable and common to many of the start-ups who drop out of the market. Understanding what these mistakes are may help to foresee some complications and therefore prevent them from affecting your own business.
Focusing Only on the Product
Many entrepreneurs centre all their efforts and resources on the development of a powerful technology product that is complete in terms of functionality and requirements, yet they completely forget about their market.
This outpouring of creativity and energy into the creation of a product or service is of no use whatsoever if nobody wants to buy it. The process must be reversed: an analysis of the market needs is the factor that should activate development.
It is essential for the roadmap of the initial creative processes to incorporate a definition of the expected returns on the development at a business level and for these to be validated.
Ignoring the Requirements and Complexities of Development and Not Having a Realistic Timeline
There are times when a good idea, for which there is a demonstrable demand in the market, fails because the initial planning and design are superficial and incomplete. This is often as a result of the urgency some companies place on completing the development stage.
Ignoring questions of security, scalability, extensions or maintenance generate a ticking time bomb and are the cause of disappointment in both the client and the technology team, not to mention the failure of the project.
Good planning and a thorough analysis of the circumstances that surround the product’s development and functionality will improve the results and allow for greater risk management.
Failing to Define the MVP Accurately
The MVP (minimum viable product) requires an airtight definition because it must fulfil the concept it represents to perfection: the simplest and most functional development possible.
Any excess or gaps in the MVP definition are problematic for obvious reasons: we could be investing too many resources and more time than is strictly necessary or we could be launching a development that does not fulfil the function for which it was designed.
It is worth pointing out here that a product or part of it can be built by integrating already existing elements. Negotiation with your suppliers involves, at the very least, having a reliable product.
Omitting Non-Tech Aspects
It is often the case that the entrepreneur is an engineer and it might be tempting for them to push all questions not directly related to the technology to one side. Commercial and marketing strategies along with all matters related to financing and the general management of the company are essential.
Successful start-ups have managers who understand that above all they must tend to the business and not just to the technical development.
Not Applying Professional Criteria When Selecting the Team
The choice of team is fundamental to any business organisation but with start-ups the selection criteria are often based on questions of personal proximity rather than professional aptitudes. Consequently, there may be cases of incompetence or lack of experience and sometimes there is a failure to cover specific posts due to budget constraints.
A responsible, motivated team with the right qualifications and an ability to adapt to an unstable environment in which trial and error processes frequently come into play is one of the key factors for success.
Outsourcing can be useful to cover very specific needs or for situations in which the team is overloaded. Having a highly efficient and effective resource supplier like Nakima is extremely helpful in the ever-changing world of start-ups.