Starting up a business is comparatively straightforward but sustaining one is where all the diligence is required. A unique concept is not the only driving force needed for a business to run smoothly, sufficient funds, product/market ratio, a well-balanced team are equally important. To solve customer problems across different sectors and to refashion the market, a number of startups are born in India every year out of which only a handful remain in the business.
Wondering how to avoid such a catastrophe? Gear up, take notes! We are here to spill some life-saving or business saving (literally) secrets which you and I need to know!
WHAT ARE SOME FAILED STARTUPS?
YIK YAK: Yik Yak was propinquity based social media platform developed by Tyler Droll and Brooks Buffington. People were able to create posts (Yaks), which were visible to other users within 5 miles. Users could respond to posts by voting. It has enjoyed great popularity especially in schools and college campuses throughout the US in 2013 and 2014. It became the most extensively downloaded social media app in the United States since its launch in 2013 and reached 1.8 million downloads in September 2014. At its peak, the business averaged $ 350 to $ 400 million. In 2016, Yik Yak dropped by 75% compared to 2015. The company led off 60% of its employees and was eventually forced to close. It sold its intellectual property in Square for $ 1 million, equivalent to 0.25% of its high value. Cyberbullying became an insurmountable problem for Yik Yak and played a major role in the app’s decline.
JAWBONE: A San Francisco-based company that launched in 1999 as AliphCom, which initially specialized in military audio technology gained ill-repute for its Bluetooth headset and Jambox speaker line. The company was raising $ 3 billion from the largest Silicon Valley companies. Its failure was due to the company’s policy towards health and fitness tracking services in 2011, which began to exacerbate product failures and financial problems, and in February 2017, Jawbone filed a lawsuit against its rival, Fitbit. Jawbone’s decline began to emerge in early 2016, when it severed its relationship with its external customer service unit after they were unable to pay for their services. The company’s founder and manager, Hosain Rahman, has reportedly moved to a new company called Jawbone Health Hub.
SHYP: Shyp aspired to eliminate the nuisance of shipping items; their app allowed users to take a photo of the item they wanted to ship, and for a fee of $ 5, Shyp would pick up the package and deliver it to the shipping company. Users did not have to worry about finding a box and packaging, or driving to a shipping store. The company raised $ 62 million but the flat fee charged for the pickup and package regardless of its size proved to be expensive and the company began to lose its customers. Shyp chief executive Kevin Gibbon has admitted that his determination to “grow by all means” and his unwillingness to listen to his advisers cost him beyond repair.
WHY DO MOST STARTUPS FAIL IN INDIA?
Startups in India collapse as quick as a flash and the reason why only 10% of startups survive and the rest all fail is their potential to adapt to the ongoing shift in the taste and preference pattern of the market holders. The business world revolves around the customers and even though it is extremely important to introduce new products and services, it is even more important to understand the customer’s inclination and keep updating their marketing strategy. https://growthcentralvc.com/product/business-environment-and-insurance/
LACK OF INNOVATION: While India is said to have the third largest startup program, it lacks newness. Most of the Indian startups are formed as replicas of global startups. The focus is more on replicating an existing model rather than creating an all-together innovative program. Innovation helps in keeping up with the newest of the technology, upgrading the productivity, maintaining uniqueness and so on.
FUNDRAISING: Lack of sufficient funds may result in the closure of the company. There are millions of ideas waiting to be transformed into successful businesses but such transformation requires investment. Startups who get seed support operate under the threat of inefficiency in collecting the next fundraiser. Initial stages of a startup must involve active fundraising, communication, meetings and visits. The more you are in the routine of fundraising, the more precise you are about what you stand for as a company and the more like-minded investors you will attract.
PRODUCT / MARKET RATIO: Several times entrepreneurs start a business which has little or no demand in the market or where there already exists a well-established business serving the targeted customers. In such a case, failure is inevitable. The companies, most of the time, rely on their instinct regardless of whether their targeted customer audience would welcome their product or not. It is important to validate their product in pilot projects before launching, or even beta-testing to reduce failure and market rejection risk. https://growthcentralvc.com/courses/supply-chain-management/
POOR CUSTOMER SERVICE: Every operation is supervised by the entrepreneur from funding, employing, advertising, management and so on that the customers often fail to make it on their list. A healthy customer relation not only helps them to understand the customer demand but also acts as a medium of constructive criticism which in return improves their product and at the same time creates their goodwill in the market. When startups are committed to being customer-centric, their decision-making becomes easy, their focus gets narrowed down and their popularity increases from word of mouth. On the other hand, a poor customer relation can destroy their goodwill, anger the customers, taper their market and can eventually throw them out of the business.
FAILED STARTUPS OF 2020 (INDIA)
2020 will go down in history as the year when COVID-19 wreaked havoc in the life of entrepreneurs and small business owners. The pandemic affected all companies big or small, while some of them managed to cope up, the rest collapsed brutally. The Travel & Tourism industry, Cinema, Transportation companies like Ola, Uber suffered massively.
“About 25 percent of the startups have less than six months of runway,” the co-founder of IT major Infosys Ltd.
List of companies that could not survive: –
Atlas Cycles (Haryana) Limited
Thomas Cook (India) Ltd
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