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Showing posts with label Failure. Show all posts
Showing posts with label Failure. Show all posts

Why Ventures Fail

Addressed stagnant or decaying markets ... bad idea ... bad location ... bad luck ... bad management ... devaluation of assets ... disaster ... dishonesty ... dishonesty with self or partners ... excessive bad-debt losses ... excessive overhead expenses ... excessive use of credit ... excessive waste ... fraud ...
high interest payments ... improper balance between major company functions ... improper control systems ... improper market segmentation ... improper market testing ... improper price setting ... inability of spouse to accept the entrepreneur's drives and values ... inadequate financial analysis ... inadequate marketing analysis ... incompetence ... incomplete homework of the venture capital avenues ... incorrect sales forecasting ... ineffective control procedures ... ineffective customer interface ... ineffective direction ... ineffective planning ... lack of experience in the business area ... lack of fiscal responsibilities ... lack of leadership ... lack of managerial experience ... lack of organization ... lack of realization of the necessity to turn cash immediately ... lack of understanding of venture capitalist's goals ... management weaknesses and gaps ... neglect ... operational over-complexity ... over-inflated organizational structures ... over-staffing ... personal and domestic problems ... personal specifications in conflict with start-up's goals and objectives ... poor communications ... poor financial projections ... poor market gap analysis ... poor psychological work environment ... poor retail locations ... poor self-discipline ... poor venture capital appetite-whetting techniques ... premature approach of venture capital avenues ... premature incorporation ... premature patents ... premature product releases ... security indiscretions ... speculative losses ... superior competition ... technical problems ... the lack of zest for life which sustains a start-up ... too many details ... too rapid expansion ... trading area changes ... unable to solve customer's problems ... unbalanced experience ... under-capitalization ... under-staffing ... unfavorable economic conditions ... weak business plans ... weak incentive systems ... weak key employees ... weak marketing tactics ... weak money-leveraging methods ... weak motivation ...

Red Flags ...

I have worked (in varying degrees, from light to heavy) with literally hundreds of new venture planning and startup teams, through my 20+ years at the University of Arizona, as a private consultant, and as a startup team member. 

I have a personal mental checklist that I use to evaluate the success probability of a new venture: can it move from the planning stage to a financially stable self-supporting business.  Some science here, some "gut feel", some "told you so" experience coming through ... but here are some of my "red flags": things startup team members say and what I really "hear".

They say: "We don't have any competition!"  ... I hear: "We haven't done our homework to see what else is really out there."

They say: "We the first to ever do this!" ... I hear: "So who cares?  If it's never been done before, maybe that's because there's really no need to do it."

They say: "Everyone is going to want one of our new gizmogadgets!" ... I hear: "Our family and close friends think our gizmogadget is really neat!"

They say: "We're going to build a much, much better gizmogadget and sell it for half as much as the competition!" ... I hear: "We have no idea how much it will really cost to make our gizmogadget or how much it will really cost to market it."

... and there are more!  Check back every now and then, and I'll update this post.