Two simple ways to determine whether your startup idea is ready to take off —or not
The startup life is very attractive to many and it tends to attract too many ambitious people that ultimately end up hating themselves for even trying to start one.
More and more university graduates in Southeast Asia are opting the entrepreneurial path following their graduation; many do not even wait until their graduation to begin. But success remains the exception instead of the rule, and many of the companies they have founded failed to last beyond the first year.
Entrepreneurship is very much like a theatrical performance, in the way that people tend to not see what goes on backstage.
So this let’s take a peek behind those curtains and understand what it takes to build and run a sustainable startup. Why is this important? In case you haven’t realised, 90 per cent of startups fail within the first year. If that is new information to you, strap in as we enlighten you on the two reasons why startups have failed and whether you have what it takes to succeed.
Also Read: 3 startups shaping AI in Southeasia Asia
Market
Ambitious human has an idea, they start working on the idea and development of the product or service. Once they start trying to sell, they realise no one is catching onto what they have built, and soon they find themselves hating what they have created and canning the product or service.
Or worse, they sail that burning ship and go down in flames with it.
According to the Lean Startup methodology, which was pioneered by Eric Ries in his book of the same title, many startups failed to take off simply because founders never take the time speak to their potential customers. About their needs, and how your product can help fulfill these needs. This is a barrier in product development as they never get to find out if there is even a demand for their product.
Be sure to consider whether there is even a need for your product/service.Analyze the market and evaluate the current solutions for what you have in mind.
In addition to conversing with potential customers, doing even a simple SWOT Analysis would be useful to comprehend the market need.
It is also important to understand who your potential competitors –and what you get to offer to differ yourself from them.
Also Read: Check out the 6 sizzling startups that pitched at MOX Demo Day batch 5
Money
So you found a need for your product in the market? Great! Now, have you considered all aspects of the finances required?
Taking into account how much you have on you right now, would you have enough to keep the business afloat for at least 12 months? How about three years? Do you need more cash to fund your operations?
Alexander Jarvis, founder of 50Folds has done a very in depth analysis that talks about understanding and proper utilisation of a runway calculator.
What if you realised that you do not have enough to support your operations? Then it is time to look into other potential sources.
Despite the rise of alternative fundraising methods such as ICOs, venture capital funding remains a popular, go-to method of financing a business for most tech startups.
But make sure to prepare yourself well for it. Not only in terms of the information that you need to provide on your pitch deck, but also the time you will need to pitch –and the time the potential investor will need to get back to you.
Fact: In Southeast Asia, it often takes three to six months for investors to decide whether or not they are even interested to invest. So be prepared for a marathon.
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Image Credit: SpaceX on Unsplash
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