More Comments on Start-ups

A positive is start-ups are now cheaper, ie

...The average start-up in the US cost $US 5 million to launch in 1999; it now costs just $50,000..."

Upfront Ventures as quoted by Sam Jones 2019

It has never been easier and more affordable to start a business and to reach out to a global audience. By going on-line, businesses can reach a global market to test a product or service or idea before having to invest large amounts of money.

A couple of decades ago, most new businesses could only service their immediate community. Now, from day one, there are global opportunities.

The biggest challenge for the start-ups is getting the customers on side, not capital.

Some questions that need to be answered:

- how do you get customers?

- have you identified the market opportunity?

"...the real challenge is...... the information and understanding the market opportunity and the customer problem..."
McGregor Duncan as quoted by Mark Eggleton, 2017

On the other hand, around half the start-ups are expected to fail as there are many risks. The flip side of taking risk is

- the high failure rate, ie failure is just around the corner

working under intense psychological pressure, especially achieving the rapid growth performance that investors require, etc

lack of sleep linked with deciding how to handle important decisions, etc

- difficult decisions that can make or break the enterprise, ie staff selection (includes hiring and firing, promoting, etc), expanding into new markets, securing additional funding, etc

- time it takes to build anything of value (around 10 years)

- under-estimating the cost of developing the start-up

over-estimating revenues

- over-promising to customers, shareholders, investors, etc

- expertise needed in the areas around the law, marketing, software platforms, compliance, etc and include a culture of co-operation and mutual support.

"...the media focus too much on issues such as the next financing round and the value of the business. Instead,......focus on what it takes to have a sustainable and scalable business, paying staff and breaking even..."

Carly Stebbing as quoted by Tony Boyd 2019

- many start-ups find themselves doing something very different to the original concept. Some examples

a) Twitch (started as a niche service video streaming computer games online. Now it is a subsidiary of Amazon to broadcast basketball and American football league games)

b) Slack (workplace messaging platform which initially started as an internal development tool to aid the team building and now-defunct video gaming venture, Glitch)

c) SmartTrade (began as a platform for connecting plumbers to customers and now is a payment app for small businesses)

In summary

In start-ups you need to be entrepreneurial

"...being an entrepreneur can be horrendous - has challenges every single day. You can go from euphoric to despondent in an afternoon......the key trait you need is utter resilience. The best entrepreneurs I meet are sustained by a missionary zeal. The people count far more than ideas..."

Alex Dunsdon as quoted by Sam Jones 2019

In addition to resilience, entrepreneurs have to be adaptable and keep things simple. Entrepreneurial ventures are best done in teams so that members can support each other in expertise and emotional support. At the same time, the very nature of entrepreneurialship is the strident individualism, self-belief and drive. Entrepreneurs can become so engrossed in their business that everything else gets sacrificed like relationships, marriages, friends, hobbies, etc

"...there is no way any success story has had a smooth ride......they are going to go through that journey of big ups and big downs. When things go wrong, which they will, you need to want to get up and put things right. It takes over your life. It is all consuming..."

Brett Akker as quoted by Sam Jones 2019

Most managers are good at understanding single, simple risk and at mitigating against it. However many struggle to understand multi-risks and their relationships to each other plus causality chains.

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