In 2019, researchers published a study in the International Journal of Financial Research highlighting the critical issues tech startups are facing across the world. More so, focusing on countries such as India, the United States, and the United Kingdom. Although these countries house the best ecosystems for startup entrepreneurs, in India, due to a lack of clear business ventures, innovation, and sufficient government support, more than 90% of these startups fail within the first few months of opening.
But this problem isn’t only facing young entrepreneurs trying to grow success out of their unicorns in India, it’s a problem that has spread across the whole of Asia. As Karen Lam wrote in Power Talk: Insight from Asia’s Leading Entrepreneurs, too many entrepreneurs are still fed the idea that success will come from failure, even though between 80% and 90% of Asian tech startups fail due to a lack of business innovation and the duplication of Western models in the Eastern world.
So what’s keeping these tech startups from succeeding, and what are some mistakes they should avoid? We explore some insights in the article below.
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A leading cause for so many startups failing is a lack of sufficient business planning or models. This sets entrepreneurs up for failure, with no clear idea or guide to follow for prospects or what they’re setting out to do. While entrepreneurs stifle over ideas, they’re losing sight of the bigger picture, where to focus their energy, resources, and time.
Minimum Viable Products (MVP) is the process that involves conducting thorough market research through surveys, questionnaires, and marketing. With this, entrepreneurs will be able to see whether their service or product is viable enough for the market and understand whether or not there is a need or gap for it to obtain success. With this, entrepreneurs will also need to conduct research, both in the public and online domain to see where their services or products lack innovation.
The same study published in the International Journal of Financial Research comments on the importance for tech entrepreneurs to focus on building a strong brand through networking and attractive marketing. For tech startups, it can be quite competitive to reveal or market a product to customers who have not yet experienced or interacted with something that houses such unique features and isn’t yet offered by leading competitor brands.
It might not be a leading issue for tech entrepreneurs, but outsourcing specialized work to other companies can save them a lot of time and resources. For example, if a tech startup is looking to file new LLC formation documentation, outsourcing the work to a designated service provider will eliminate a lot of stress and unnecessary administration.
There is a time and place for everything, the same goes for the pace at which you’re moving. Tech entrepreneurs, who have a thorough and detailed plan of where they’re going should be able to launch within a respective timeframe, not being too slow to share or market their ideas. The same goes for the other side of the spectrum, don’t launch if you’re not ready, or have enough data or financial security to start. It’s about finding a balance between being ready and being over-eager.
This accounts for a lot of things, but more importantly to financial backers and a pool of interested investors. Be ready to go public, and share what you can and want to with interested financial supporters. You don’t have to play all your cards at once, but being open about your intentions and what you’re planning to do can seem very attractive to those who can support you financially.
Tech startups have exploded in the last five years, but only a fraction of those can survive. So how do you avoid going under? There are a plethora of ways, but it’s important to study and understand your product and your market. Be sure to offer the solution to a problem where there aren’t any answers. The tech industry is solely driven by innovation, and that’s where you need to get it right the first time.