By Tamara Pupic
Is it time to call it a day, or should you persevere with your business?
Did I get it wrong from the start?
Before we look into obvious signs that your brainchild is not successful, let’s revert to a few words of wisdom of the co-founder of Silicon Valley’s Y Combinator, Paul Graham. He lists 18 things a start-up founder should avoid in order to make his venture successful.
He explains that all of them derive from one single mistake that can kill all start-ups – not making something users want.
Whether it is being a single founder, choosing a bad base, or choosing a small, obscure niche in the hope of avoiding competition, Graham is confident that it all comes down to people not wanting your product. A number of other stumbling blocks come in the form of launching too early or too late, raising too little money or spending too much.
One of the most common reason start-ups fail appears to be ‘sticking to your vision’. While Graham explains that this approach can, he argues that “start-ups are more like science, where you need to follow the trail wherever it leads.”
Should I persevere?
Even when confronted with their own limitations, emotions and anxiety states, many start-up founders still believe that there must be a number of raving fans of their product waiting to be discovered.
Ignoring the absence of customers’ interest is dangerous and can lead to a certain level of delusion about your business.
If you’re letting your passion take control over rationality, it’s time to take some time off, gather your thoughts and take a deep breath because you might need to close your start-up soon.
What if I regret this decision?
Although the question sounds like the last breath of hope that the reality might change, you might be right. Therefore, you should seek advice from industry experts.
In recent years, many start-ups have followed the ‘lean start-up’ approach, which advocates rapid development, small teams and constant improvement. In addition to the recipe for building products, their advice for developing markets is to keep constant focus on customers.
The concept’s founders suggest that you test whether you have more than 25 percent of target users on your website every month. If not, the decision to close might be the right one.
What about my co-founders and team members?
It can be hard to talk with colleagues about wanting to shut the company down, but it needs to be done.
You should first talk with your partners and co-founders. Go through all the contracts, bank statements, legal documents, invoices, and similar to find out what your current obligations are and be honest about them during this conversation. This will also allow you to lay out the division of ownership with supporting documents.
Before meeting the team members, try to find a way to help them get new jobs – these are the people who took the risk of joining you hoping for a different outcome. Start and end the meeting by thanking them for all the great work they did.
What about me?
We’ve all heard that the best way to face a failing venture is to take full ownership of the outcome. Furthermore, we all know that the start-up community celebrates failure, but when it actually happens to you, you don’t hear the trumpets, right?
Despite having failed this time around, you’ll soon realise that you managed to pursue your idea and make it a reality. You also managed to form your own team, which means you managed to get them believe in your vision.
And those who have done it once can do it at least one more time. Next time around you’ll have a lot more experience to fall back on.
For information, tips and advice on setting up a new business or insights from those who have taken the leap into the world of entrepreneurship, click on the Arabian Business StartUp section.