Successful startup business model requires sound and diverse management skills to ensure its long term sustainability against existing and emerging competitors. Any brilliant concept becomes successful by having a proper vision and better resource management to accomplish those visions. Hence sound managerial skills are crucial for every entrepreneur to convert an small idea into a big business opportunity. A good entrepreneur thinks and plans future ahead of its time and ensures the proper infiltration of vision into potential market.
“Good management is the art of making problems so interesting and their solutions so constructive that everyone wants to get to work and deal with them.” – Paul Hawken
A general survey comprehends that around 98% of the startups fail because of their business model; around 87% startups failures are driven by poor management, around 91% failures are because of financial issues. Business model failure, financial failure and other issues all are related to the managerial skills of founders. In spite of having concept with potential to infiltrate in the market volume, startup fails in lack of proper planning, co-ordination or commanding. If all the defences, explanations, rationalizations and justifications for business model failures are stripped away, the only reason of startup failure is poor leadership skills.
“Businesses don’t fail, leaders do”
FS Labs comprehended the major factors of startup failure and found that most of the brilliant startups fail because of management failure. Inexperienced founders struggle with the capability of analysing the potential of their idea and converting it into a big hit and it is always reflected in their startup journey.
As discussed with Amit (changed name), founder of a brilliant startup (not disclosing the name), “the biggest challenge for me during my startup journey was to convince the other founders to remain stick with our original idea and incorporate the changes gradually rather than in one day, as it would have wasted our entire efforts till date. So I took the mid-way, created a portal to suggest the changes with proper validation and impact and mean while kept them motivated to execute the original plan. So everyone felt mastermind of evolving business model, and we successfully develop our business model for further gradual changes”
“Management is doing things right; leadership is doing the right things.” – Peter Drucker
Here is FS Labs Analysis on startup management failure:-
Forecasting and Planning Failure – Forecasting is the ability of entrepreneur to decide the future plans of startup based on expected or targeted market volume. Planning is to align the resources with scope of all the required activities to optimize the revenue model as per forecasting. Entrepreneurs struggle mostly with the ability to plan on the necessary verticals of planning.
Startups fail because new entrepreneurs have limited experience of making future strategies. Internal conflicts in team at initial stage is one of the biggest issue for entrepreneurs and at that too at a point when they don’t have the framework for future and everyone wants to execute as per their philosophy.
Working without having any plan is also a major reason of startup failure when the tracking of process is nowhere and hence the frustration comes into picture in consideration of short term success.
- What if you don’t know what you need to do?
- What if you are not utilizing your limited resources in optimized way?
- What if you have not defined baselines to decide the completion level of any activity?
- What if your expansion is not pre-planned?
- What if you have to struggle each day during your startup execution for fluctuating targets?
Planning-prior to execution and forecasting-to decide the future strategies are two key tools for ensuring the success level during further developments in startups. Estimating the market size of your startup concept and developing the required market capturing strategies based on the level of coming competition are the key elements for startup secured future.
Organizing Failure – Organizing is the ability of entrepreneur to align the resources in optimal manner. Since the fund flow of every startup is limited, so it’s necessary to align the resources with development plan and revenue model.
Startup fails when entrepreneurs are not able to utilize their resources in the best possible way. Uneven distribution of resources is the biggest challenge for every entrepreneur and failure in this finally leads to startup failure –
- What if the scope of each activity is not clear to stakeholders?
- What if there is no time plan for execution?
- What if you have not estimated the cost associated with each of the activities and distributed the funds accordingly?
- What if you have not defined a quality baseline to ensure the completion of activities?
- What if the flow of information is not sensible and appropriate?
- What if you have not estimated the upcoming challenges and estimated the mitigation plans beforehand?
- What if all the manpower is not aligned as per the skills sets and requirements?
- What if there is no integration among all the available resources?
Planning on all the knowledge areas – scope, schedule, cost, quality, communication, risk, human resource, integration helps to organize the resources in best way. Once you have decided the basic frame work for your work, it’s easier to track the progress meter and attention required at every stage.
Co-ordination and Commanding Failure – Co-ordination is the ability of entrepreneur to ensure the execution as per defined baselines. Since its only human resource that align other resources with baselines and every human has a different set of thought process, so it’s necessary for entrepreneurs to involve in the major decision making processes and ensure what level of decision making power could be left with other stakeholders to manage the resources.
- What if the defined baselines are not being met?
- What if the stakeholders are chaining the baselines as per their comfort?
- What if the major time is getting consumed in conflicts management?
Co-ordination among all the activities, resources and stakeholders is essential to ensure the proper execution of defined baselines.
Controlling Failure – Controlling is the ability of entrepreneur to modify the baselines as per market need and ensure the alignment and execution of resources as per fluctuating targets. Since the objectives require modification as per consumer behaviour and the competitors’ strategies, it’s compulsory for every entrepreneur to control the progress under inconsistent marketing need.
Startup fails when entrepreneurs don’t have the ability to decide the right future development of startup. Over expansion without control and limited business model without further expansion strategies lead startups towards failure.
- What if the market demands change in the existing business model?
- What if the market demands introduction of additional verticals?
- What if the competitors are infiltrating the entire established market base?
Proper control of entrepreneur on the entire business model is essential so that the vision of startup is met.
If entrepreneurs take care of each of the above mentioned factors, the probability of management failure is considerably lower down. Wish you luck for your startup. Stay connected for more updates.