Business Mentor: The rise and fall of a startup

Bizar Male
The Metro Manila skyline at sunset seen from Antipolo, Rizal. Mark Demayo, ABS-CBN News file photo

I have seen quite a number of startups that did not last long enough. Most of them started out alright. The enthusiasm of these novice entrepreneurs is truly astounding. However, some of them want to grow fast too soon and things don’t work out.

Here are some of the reasons why some startups rise quickly but fall just as quickly.

1.    Joining the hype. A startup that is built around hype will fall once the hype starts to fade.

2.    Aiming to grow too fast. Speeding up growth requires an entrepreneur to either add capital to his business using his own money or encourage others to invest. While this is normal when a business aims to expand, doing this too soon can make their business crash and burn. This needs a lot of planning, and if done in haste, most often than not, the business fails.

3.    When others copy what you started. Having many competitors may force you to decrease your prices to remain competitive. Sometimes it comes to the point of almost just breaking even. To again gain momentum in the business, an entrepreneur must gain the trust of his customers. Massive marketing efforts should be on the line, otherwise, you would waste what you have invested in your business.

4.    Not adapting to growth. A business requires senior specialists and better systems when it rapidly expands. Sticking with the same people and system they started with would harm the organization in this case.

5.    Not having enough competent staff. As a business grows, staff need to be added. Competent workers may become short in supply. If staff are insufficiently trained, they might not do their tasks very well and customers will notice. A business will fail if it cannot satisfy its customers. 

6.    Sticking with old beliefs and practices. The rapid increase in the number of people working for the business may require adapting new principles and beliefs. Unless you hire people who share your vision and believe in your plans, the business would fail. 

7.    Doing legal shortcuts. Some entrepreneurs skip legalities because they want to grow fast and boost earnings. Once authorities find out, they can immediately shut down your business.

When investors start seeing sales fall due to the factors mentioned above, an entrepreneur should be prepared for investors abandoning his/her business. You can choose to keep running it using your own resources, but if you don’t have enough capital, it might be time to sell the business for good. 

Learn to take things slowly and check on how the market accepts your business. Growing too fast may lead you to fail instead of succeeding. Plan wisely. Ensure that your product/s fit the market perfectly. And as much as possible, never rely on what is just the “in” thing. Consumers have become wiser. Therefore, prepare to offer them products and services that will always answer their needs. Your aim should be for the long-term.

Remember, that not every company is destined to become a fast-growing company.


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For more information, you may contact Armando “Butz” Bartolome

by email: [email protected]

FB Page: Butz Bartolome

website: https://www.butzbartolome.com

starting your own business, start up, small business, entrepreneur, personal finance

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