Haris Ahmed, Chicago Consultant: Top 3 Reasons Why Startups Fail
In the business world, one of the things that Haris Ahmed (Chicago)-based management consulting firm Pragmatium Consulting, Inc., finds most unfortunate is that companies consider consulting services when it’s too late; often turning to management and business consultants only as a last-ditch effort to save the company from going bankrupt. And sometimes, not even the best management consultants can save the company because the issues are far beyond repair—or if they are, it would cost more than what the company is worth. Cutting losses would be the best option in such cases.
This post looks at some of the most common reasons why startups fail; and while there may be several factors that are at the root of these common causes, the underlying, and arguably most relevant factor, is leadership. Haris Ahmed, Chicago management consultant, believes that everything starts with leadership; now whether this will take the business to profit or loss all depends on the leader and his leadership style.
According to an analysis conducted by CB Insights, the top 3 reasons why startups fail are: there isn’t a market for the product, the company had problems with cash flow, and the company wasn’t backed by a solid and competent team.
Haris Ahmed (Chicago) expounds further:
1. There is no market for the product. To be more specific, the startup’s target audience doesn’t need the product that they are offering. The concept may have seemed promising at first, and on paper, everything may have looked as if it will take off in a matter of weeks. But when the product hit the market, no one was buying. If no one is buying, you won’t have a business for long.
2. Problems with cash flow. Poor financial management, lack of financial backers (i.e. investors), lack of foresight and anticipation, or all of these, could eventually leave the company’s coffers dry. And when there is little money to run operations or pay for unforeseen expenditures, this could only go one of two ways: the startup falls into debt because of heavy borrowing from loan sharks (easy to get, hard to pay) or it could shut down operations for good—in most cases, both.
3. No competent team to help the startup achieve its goals. One of the most common issues that Haris Ahmed (Chicago) and his management consultancy team see in organizations that have sought their help is underperforming personnel. It could be because the leader isn’t good at motivating the team, some employees were hired based on recommendations alone, there was lack of training or none at all, and a lot of other reasons. The bottom line is, if the company doesn’t have a team it can rely on, a team that they don’t have to monitor all the time, a team they know will do a great job, and a team that knows the company’s goals and takes positive action to help the organization achieve it, then you can expect to encounter issues down the line. All businesses need an exceptional team to back it up, and it’s more important for a startup because your future is at stake here. Everything and everyone involved in your startup is a key player, and each of these players should be handpicked by you, the leader/business owner.