We must not miss the fact that all large businesses were medium, small, micro and startups at some point in the past.
Interestingly 20% of enterprises fail within the first year, only 50% survive beyond 5 years, and only 30% survive beyond 10 years.
Here are 6 fundamentals of survival and business growth of a startup. Most of these appear to be obvious, but not acted upon with high priority by many founders and business leaders.
First, don’t delude yourself into thinking that your business idea is unique in some ways, and you have an adequate support system, resources, and patience to make it succeed! Allow yourself to be fully convinced about the entire context of your business venture.
Second, continually monitor your own pride, optimism, excitement, happiness, and physical wellbeing. If you are uncertain, pessimistic, distracted, unhappy or unwell, there is no way that your business will succeed. It should be a joyful journey, despite a few bumps occasionally.
Third, valuation expectations can be salivating and distracting. Are your future revenue projections standing on breakthrough product/service experience? Is product/service faultless? Is it scalable? Customer delight will lead to a valuation upswing. Nothing else will.
Fourth, you may be attracted by the chance of raising equity or debt to fuel your growth. Don’t get carried away with unrealistic expectations and get into a situation where you lose ownership control or get into a debt trap. Both equity and debt are smart levers for business growth, only if used thoughtfully.
Fifth, more than 80% of businesses are known to fail to scale up because of cash flow problems. Someone had said ‘Revenue or market value is vanity, profit is sanity and cash is reality. Ensure that cash generation from business is not neglected. Nothing else matters as much, for the long-term survival of your business.
Sixth, as you grow, you must professionalize – build a leadership pipeline, imbibe top-class business processes, bring automation and digitalization, and put in place excellent corporate governance – without these, it is guaranteed that your business will not scale up beyond a point.
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Startups need not suffer high rate of infant mortality if they receive good mentoring.