92% of Start-ups fail
Failure is not falling down, but refusing to get up after you have fallen down. According to a recent report by Startup Genome, 92% of business ideas fail as of 2019. And more than two-thirds of startups cannot generate any return for their investors [1]. Without exception, startups in the countries with the best entrepreneurship ecosystem also fail.
However, successful stories exist. Therefore, the importance is whether you have enough patience and resilience to follow your chosen path or not. This is because turning business ideas into successful businesses is a long journey.
Reasons why startups fail
According to CBInsights’ study [2], the top reasons for startups’ failure are:
- Run out of cash/ Failed to raise funds (38%)
- No Market Need (35%)
- Got outcompeted (20%)
- Flawed business model (19%)
- Pricing/Cost issue (15%)
- Not the right team (14%)
However, some startups with good product-market fit still fail. What are the reasons?
Inability to find the right team members, strategic partners, and investors
According to the research done by Professor Tom Eisenmann from Harvard Business School, the reason lies in “bad bedfellows”. This means the team members, the strategic partners, and the investors are not suitable for the startup [1]. Meanwhile, despite how excellent the founders are, it is impossible for them to know and do all the tasks. Some may lack management experience and competence. Some may lack experience and expertise in the industry of their business, etc. And how willing they are to invest all their savings into the startup, it would be never enough. Therefore, for startups, we will need suitable employees, strategic partners, and investors.
Quincy Apparel case study
Particularly, Professor Tom Eisenmann [1] cited Quincy Apparel to prove this reason. Despite competent founders and the desired business idea, Quincy’s founders had no experience in the apparel industry, making them have no connection or network to find suitable staff, partners, and investors. Specifically, as startups, they should have hired multi-taskers, but because of their inexperience in the apparel industry, they hired specialists instead, hoping that they will do all the specialized functions in the production process, from material sourcing, and pattern making to quality control. But the hired members were not flexible enough and could do only within their expertise, leaving many tasks undone. Their manufacturing partner failed to keep the delivery commitment. It was because Quincy had no reputation in the industry, and placed a small order with size adjustments. Their investor pressured them to grow quickly, taking their experience of investing in tech startups. But the industry is different. This forced Quincy to invest all the cash in inventory and had run out of cash before their production issue could be solved. As a result, Quincy had to close their business less than a year after its launch.Having business ideas is only a start. Success or failure depends on the implementation of and ability to turn those ideas into desirable products and profitable businesses.
So, the success or failure of a startup does not depend solely on good business ideas. More importantly, startups need to turn those ideas into the desired products and can implement them, and commercialize them successfully. And to do that, what you need is not only a vision, management competence, and the desired product but also the connections and network to find suitable talent, partners, and investors as in Quincy Apparel’s story. However, the question is “Where can you find the connection in this big entrepreneurship community?”Don’t let your business ideas have a short life
To implement business ideas successfully, it is necessary to have support from a community and digital platforms
To implement business ideas successfully, besides the capital and support in expertise from investors, you will need support from multiple parties. That is the legislation to create an easier business environment for startups to operate. That is business incubators to help founders improve their knowledge and competencies. That is crowdfunding platforms to help startups raise funds from the community for their business operation. That is other digital platforms such as on-demand talent or consulting marketplaces to help startups connect with experts and talents in various business fields. So, what has Vietnam had so far to support startups?The Entrepreneurship Ecosystem in Vietnam
As of 2018, Mrs. Hoang Lan Pham, from the National Agency for Technology Entrepreneurship and Commercialization Department, under the Ministry of Science and Technology of Vietnam, indicated that Vietnam still lacked legal regulations and funding for startups, meanwhile investment models in the form of crowd-funding platforms or platforms to support startups have not existed yet [3]. After 4 years, the Entrepreneurship Ecosystem in Vietnam has had the following developments:Vietnam is ranked 59th among 100 entrepreneurship ecosystems globally, but the number of crowdfunding platforms is still limited.
As of 2022, there are thousands of crowdfunding platforms and organizations in the world. Some prestigious platforms to name are Kickstarter, GoFundme, Fundly, Indiegogo, SeedInvest, etc. Meanwhile, in Vietnam, the 59th among 100 global entrepreneurship ecosystems and the 44th in the innovation index [4], the number of these platforms is very limited. As mentioned in Fintech Report by MBBank, as of 2020, only 5 in 115 Fintech companies operate in the crowd-funding industry [5]. This number is too modest in comparison with nearly 1,500 crowd-funding organizations and platforms in the US [6].Vietnam has over 119 business incubators and 138 universities/colleges having activities to support startups.
To support entrepreneurs and startups in expertise, experience, and staffing, excluding self-arising unqualified community groups on social media, there has been the emergence of many business incubators to support entrepreneurs and startups globally. In Vietnam, there are 119 incubators and 138 universities/colleges having activities to support startups [7].The emergence of a digital marketplace in business management and entrepreneurship to support startups on their path toward success.
Particularly, a marketplace for business management and entrepreneurship – Kounselly has been launched to support entrepreneurs and startups from A to Z, helping you implement your business ideas successfully.
Proud to be the first platform to integrate many functionalities, Kounselly brings you a marketplace for experts/consultants and entrepreneurs/SMEs to connect, and exchange services as packages in general and consulting services and counseling sessions in particular. Kounselly is also an ecosystem, a forum, community, and knowledge center for entrepreneurs and experts in all business fields to exchange information, knowledge, and experience, share concerns and get advice to solve business problems. The value that Kounselly will bring you is an opportunity to connect with the experts and talents you need, and a community to always support you, for your development.
See more: What is a business acceleration program
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