Why A Startup Fails

As a follower of www.CodeProject.com and their newsletter they often share very interesting articles and blog entries along with technology news.  The other day they shared an interesting story: https://oncletom.io/2014/why-our-startup-failed/  Its an eye opening look at why a start up failed with insight tips and an emotionally compelling story especially for those who in a start up or working towards building a start up.

Here are a few tips from the article that hit home for me:

Trust Your Gut - in short, don't let someone else sell you something or lead you to believe an idea is just too good to fail

Each hire should be tight to objectives, costs and metrics.

• Is the hire generating revenues, is it creating product value or is it sustaining the organizational growth?

(This advice could be applied to any endeavor.)

Are you have any financial involvement insist on 100% open accountancy.  If someone does not know where every dime went or tells you not to worry about it - these should be a big red flag.

Don't take for granted that interest in your product is going to equal sales or contracts.  Until money is in your hand, you don't have a sale.

Big Customers = Lots of Time.  The larger the company is odds are the more time it is going to take them to buy into your product or service let alone move the purchasing outcome through their internal channels. 

Companies want to know you are going to be around for a few years. We you don't have years of operating under your belt it's hard to guarantee you are going to be around to support your product or service for years to come. 

Investors don't want to invest if you "need" their money.  Investors are going to be most comfortable investing when you can show their money is not needed in order for you to operate or develop the product correctly or perform some sort of core business function.  Investors in a start up want to see what return they could gain from their investment.  If they see you are going to carry on, continue to develop, grow and generate sales without their money, that is when they want to invest.  Because their investment dollars could help you do all those things more quickly, generate more money and create a return on investment. 

If your sales pitch to a potential investor is, "We have a lot of interest and a great idea, we just need your money to hire people to build it and ship it." - odds are you are not going to generate investment.  Because at that point you are asking an investor to become a business partner and essentially help run/start the company.