START UP COMPANY’S PROBLEMS AND ITS LIFE CYCLE

Dr.S.SUNDARARAJAN, Associate Professor, SIMS

            Start-up company is conceptualizing well define business idea into effective business model and implementing the same with entrepreneurial skills. A start-up is a young and fresh company created by one or more entrepreneurs to develop a specific product or service and bring it into market. A start-up is called as an entrepreneurial venture which seeks financial backings to get off the ground. These ventures are formed based on the entrepreneurs’ idea and growth to succeed. Startup companies are increasingly emerging in and around the country from last two decades. Government is also supporting entrepreneurs through Make in India and other governmental schemes even though the start up ventures are having their own problems to get it started and to proceed it in every stage of its cycle like infrastructure, government regulations and availability of finance etc. This article discusses about the process, challenges and the life cycle of a newly started business venture.

PROBLEMS

Competition

New businesses are often like a little kid in a very large, bully-filled playground. Rival companies that are already trading in similar markets to yours, already have the upper hand and advantage. They have been operating for a longer time, and have gained more knowledge in operating that sort of business, know the market better and can probably adapt to the market changes quicker.

Lack of Funding

99% of people thinking of starting a business won’t because of the realization of the costs and the lack funding available. It’s funny that we start businesses with the aim of making loads of money, but in fact you can’t make money unless you have money to fund the business from the beginning. Financial risk plays a huge part in small businesses, ensuring and maintaining a healthy cash flow is essential. Start-ups need substantial amounts of money to cover costs. When you’re starting from scratch there’s many things that need to be developed, for example, logos, website, accountants, marketing materials, staffing, launch programme, merchandise, the list goes on and the bill goes up and up.

Time Restraints

Starting a business is not a part time Saturday job, business owners need to be able to commit to extremely long hours in the start-up phase. There is everything from staff contracts and health and safety policies to marketing materials and websites to develop and the longer it takes the longer the business takes to be established and the higher the financial risk becomes. The owner will become responsible for everything from the grunt work to the office managerial responsibilities.

Poor Planning

Many business fail in the first year due to poor planning and preparation before declaring themselves as open for business. Before launching any business everything from suppliers to rates should be investigated. Noticing a hike in unexpected costs after you have just launched a business can bankrupt the plans in no time. Extra time should be taken ensuring that everything is covered; the best way to do this is by creating a comprehensive business plan.

No Historical Data

New start-ups often face the problem of just not knowing what is going to happen or what should happen. Launching a new business concept to the market or even for the business owner  with a little knowledge of the industry can be extremely hard to plan for, as there are no expectations.

LIFE CYCLE:

There are three stages in start-up life cycle, those are:

1. Bootstrapping stage
2. Seed stage
3. Creation stage

ENDNOTE:

We concluded that every newly started venture will have its own problem even when government provides support because new ventures are not getting enough financial funding in each of its life cycle.