Startup Stages, Funding, Working & Failure

In the last article, we read about the Startup Business Model and the Problem-solution approach. Everyone can build their own startup, let’s see how:

  1. Go around note down the problems in the society 
  2. Implement logical knowledge 
  3. Brainstorm the idea 
  4. Bring in “if and but”
  5. Strategize and Implement it within a small area and note down the progress.

Sounds easy!! Well, you will face a lot of hurdles during the initial stage but all you need to do is face the problem and get out of it with learning notes. 

How to Convert Business Idea into a Startup?

Everything starts small but to get even there you need to start with absolutely nothing.

  • How to start your startup?
  • Turn Startup idea into Money?
  • Develop your initial startup idea?

No one can really tell you answers to the above questions because that’s what makes it “your” startup, but here are some tips to convert a business idea into a startup.

  • Drop everything else.

You obviously have to kick the bucket and say goodbye to your stable life, if you are working as an employee someplace else. 

Personally, I will never suggest leaving your present company until you have established your roots in the market. 

  • Find your passion.

Finding passion can be tricky, but finding it in terms of wanting to solve a problem is easier, hence converting a business idea into a startup via a startup problem solution approach. Look around and figure out what bugs you the most and try to have an alternative path hence develop your startup idea to turn the startup idea into money. 

  • Get some training

This is the developing phase where you develop your startup idea. Be it mental or physical but definitely, technical training to get better at what you already do to put into implementation what you had previously designed and planned out as your solution to the problem. 

  • Layout

Based on the rough sketch of a plan is what you trained on however, the time has come where you professionally paint out the elaborate plan with figures and lines of code here and there. This would help not only you but others on track too.

  • Discuss the dough.

The startup idea requires money to sustain, and a budget has to be designed before actual implementation. The budget is used to gain funds for the project which can also help you get external help from the investors who often lendable engineers to work in the team and enhance the product designed.

  • Legal work

All legal work has to be completed before you even write one line of code (legally!), for any action taken against you may be used to confiscate any work you have done till now. All the government verification is done online as of this date and hence has made the process very easy to finish.

  • Hire talent

In this age, talent usually crawls up to you when an ad is posted online for an opening. You can conduct a recruitment drive to hire the best employees who seem fit in this company to work and turn startup ideas into money. 

  • Create teams

Based on the compatibility of the employees and the kind of work to be done, we create teams to maximize efficiency and output.

  • Stay safe, money-wise

One must always invest in themselves and save for the worst in case the company deals with some problems that do not end well.

  • Publicize

It is extremely important for one to put it out there, socially, about a solution for people to increase the customer base of the company this will also contribute towards developing the idea. 

5 Step Startup Growing Stages

“Life cycle” of a startup may or may not exactly be a cycle. One does not plan the company’s demise when one plans to get it to soaring heights. It goes through multiple metamorphic processes to finally reach the end result. It is a troublesome process which is the only way for the company to adapt, improvise and overcome all difficulties to sustain in this market.

idea startup

The life cycle is best described in 5 startup stages:

  • Idea

The idea formulates, and the process is kick-started with extreme enthusiasm. This is the initial startup stage where the idea is thought about and spoken to a fair few hoping to form a team and collect starting funds to start the startup. 

  • Growth

The growth of the startup at this stage is a very risky business. Although by this stage, your startup is making adequate revenue and hitting all the marks, it is still a work under progress and the product isn’t fully designed. Regular updates to keep the customer base interested are the main goal. If your startup has hit this step of the stages, you are certainly on the right track.

We have elaborated Startup funding stages in the later section.

  • Settling down

This startup stage is the establishment of the company. This stage means that your company is in profits, doing well. There is a stable source of income with the company at this rate. There is also a fixed and well-interested customer base for the company. This startup stage is good news.

  • Spreading out

We fix an establishment in one place but that shouldn’t hinder the growth of the startup company. If required and dreamt of, the company should open branches in different locations and head them the same way we headed this establishment.

  • Exit

Any respectful entrepreneur would understand when you part with a business after it has run its course. In case the handing over of the business isn’t taking place, the company should shut down its operations.

This life cycle may or may not work for every kind of startup for there are many kinds, however, the process remains mostly the same.

How to register a Startup Company in India:

In this ear of technology and intelligence, the Ministry of Corporate Affairs or MCA has come up with a brief procedure to legalize your company which allows you to work for it and publish the product as long as it abides by the rules and regulations stated in the Companies Act published in 2013.

The procedure to register your startup/business fairly simple and completely digitized. The documents that are required only include the soft copies of the forms you fill, proof for the company’s name and 2 additional requested documents.

  • Firstly, the Digital Signature Certificate or DSC has to be requested and acquired.
  • Second, Director Identification Number or DIN has to be acquired by the company holder. There are the only two extra documentations required (You can fetch complete information from govt. websites)
  • MCA portal must be visited next and made an account on. (http://www.mca.gov.in/)
  • Lastly, officially apply to the portal.

That is the end of the simple process of registration of your company in India. The location of the company office needs to be fixed and proofed for registration, which would later serve as headquarters for operations.

Disclaimer: Kindly cross-verify the information with a legal expert before following the mentioned steps to register a startup in India. 

D. Startup Funding Stages | Types of Startup Funding 

We cannot stress how important startup funding stages are for all budding startups, not only to provide capital to function but to have better advisory from able and established investors. The first step to acquiring funding is to know what the steps are to source startup funding and understand Startup funding stages. Below we are discussing different startup funding stages:

  • Seed Capital

The first startup funding stages include Seed Capital. Much like the significance that the seed of a plant holds, sprouting into a new plant, this investment is the first amount deposited for the company.

Often the capital is from the CEO’s personal possession or a family member’s pocket. This makes it a private investment, and hence the return of this capital can be more flexible than from any funding agency. This is about the first Startup funding stage. 

  • Angel Capital funding

In case the seed capital ends up not being sufficient, they use this fund. These aided funds are mostly by personal connections or crowdsourcing. They have flexible return policies and hence make business easier. There are various startup funding stages but better achieve stability before outreaching for funding. 

Startup funding stages

  • Venture Capital Financing

This form of funding is iterative. The VC works in rounds, each of which is alphabetically named. Stock prices are set for the company and are sold accordingly. If the company survives the market, then the series B round will value the company at a higher price and will be outbid. This process goes on until the company ends in a standstill. This one is an important Startup funding stage. 

  • Mezzanine Financing

Any investment made 6 to 12 months prior to the IPO is known as mezzanine financing. The capital made after the IPO is used to pay back the investors who invested in the start-up prior to the IPO

  • IPO (Initial public offering)

Once the company is ready to show itself to the public, they allow the public to buy stock in their company to gain capital, hence raising Startup funding.

It gives the company the right to decide what the prices of the stock would be. They take help from their financial advisers, which at this early stage of the company’s life-cycle, are investment bankers who evaluate the company and then the company publishes a notice.

Common Problems Faced by Startup Companies

Not every problem starts off big. They take time to manifest into common startup problems that can’t be fought off. Startups can face very similar problems to that of large companies and also that of personal stores and small businesses. That is the con of being a start-up CEO, having to know to deal with common startup problems of all scales.

If well attended to, these startup challenges may not end with the shutting down of the startup although sometimes they do.

  • Cultural boundaries: Startup Challenge 1

We know every Asian family to be a family with a stable income and a secure job for every person of working age. Leaving a secure job for something that can get you into a risky position is often so frowned upon that people don’t leave it to pursue their passion. This can be a startup challenge if someone very talented and worthy decides to not take a risk because they haven’t been taught how to.

  • Customer feedback: Startup Struggle 2

Think of the number of times you’ve filled out a feedback form and didn’t care how it would reflect on the company. Think of the number of times you’ve clicked on the same rating for every rubric just to get it over with. This is a common startup problem with every company that runs on customer feedback to make changes and improvements in the platform.

  • Not enough assessment: Startup Problem 3

Every part of the product is thoroughly assessed before being put out in the market. If any part of the product isn’t sufficiently tested by experts, the defected product could tarnish the company’s image.

  • Government limitations: Startup Challenge 4

As good as it is for the government to be taking action against illegal businesses and framing into bills, the rights of the people that they hold against businesses to secure themselves, these government policies can often lead to hindrances for the company that is actually trying to make a positive change. Make sure to avoid such small business problems. This startup challenge is common among all emerging startups. 

  • Competition: Common Startup Challenge 5

 Almost every company has a rip off in the market that doesn’t use the same tech but extremely similar one which makes it difficult for companies to stay upright with all these competing companies being against them. They often function in a lesser budget and work with less revenue and are cheaper, hence it can lead to a possible shutdown of the company.

  • Inadequate marketing: Challenge new venture startup 6

It is important to have the word out about the company. In this era of globalization, everyone on this planet can use a certain solution, if provided globally. This can only be possible if publicized well. This not only directly affects revenue but also affects the hiring of talent, feedback, and improvement of the product.

  • Incompetence in the engineers: Problem in a new venture startup 7

The product displays the talent that the developer holds. If the engineers aren’t competent enough, the product will not reflect and be of quality. This, in turn, decreases the customer base, decreasing revenue, which can be a problem for the company.

  • Not enough funds: Common Startup Challenge 8

Lack of funds as a start-up is every entrepreneurs’ nightmare. In this freakishly crowded market, where everyone is outbidding themselves, it is difficult to gather investors or acquire a loan. Better schemes have now come up which helps entrepreneurs to solve real-world problems with their tech, however, lack of funds still remains the leading causes of startups shutting down

Final Thoughts!

What leads to a startup failure | 5 Startup Failure Reason

Not everything can be solved, is the bitter truth of life.

All problems have repercussions that sometimes lead to drastic ends. Hence, not all startups make it to being unicorns, a few shutdowns. Sometimes, because of their own shortcomings and at times, it’s just bad luck, we have mentioned the same startup failure reason below.

A few problems inching the startups to the cliff end are often slow in progress but inevitable, as listed below.

Top 5 Reasons for Startup Failure – Reason 1

  • Product inefficiency leads to startup failure | Common Startup Failure Reason

The company functions at one thing and one thing only Product/Service. Be it any end product, service or product, based on your kind of startup, if you cannot create an end result which reaches up to the expectations or isn’t received well enough as it isn’t what the consumers were promised, it will lead to a much expected, demise of the start-up, in most of the cases.

Top 5 Reasons for Startup Failure – Reason 2

  • Incompetent staff contributes startup shutdown

Every company runs on its engineers and staff members, from development to sales to running the office building. If they cannot hire efficient staff, it will definitely lead to product inefficiency which would be the ultimate cause of the company shut down. Moreover, if a company ends up making an average product and has time to make their company work, by some miracle, the incompetent staff would make it impossible for them to redeem their chance.

What leads to Startup Failure – Reason 3

  • Lack of clarity in approach

Often, the destination is known, but the road taken isn’t. This translates to the fact that the vision for the company may be correct, but the approach is wrong. This can bring about dead ends in terms of revenue, development, etc, thus aggravating the company members who end up quitting or dropping the idea entirely.

Why Startup Failed

Common Startup Failure Cases- Reason 4

  • No funds mean startup failure?

Lack of funds as a start-up is every entrepreneur’s nightmare. In this freakishly crowded market, where everyone is outbidding themselves, it is difficult to gather investors or acquire a loan. Better schemes have now come up which helps entrepreneurs to solve real-world problems with their tech however, lack of funds still remains the leading causes of startups shutting down.

Why do Startup Fail- Reason 5

  • Not being able to fend off competition

With the great shot, comes great recoil. Almost every company has a rip off in the market that doesn’t use the same tech but extremely similar one which makes it difficult for companies to stay upright with all these competing companies being against them. They often function in a lesser budget and work with less revenue and are cheaper, hence, it can lead to a shutdown/startup failure.

There are a few reasons “Why do Startup Fail” precautionary measures are always taken by companies but the market is a very unpredictable place, one may never know of every impending problem that they might have to tackle.

That’s it from my side regarding Startup Ventures. I have tried to cover every section revolving around the startup industry. If I missed something feels free to get in touch via the Contact Us section.  

Next Step: Browse our Startup Model Section

Summary
Startup Idea | Register | Failure
Article Name
Startup Idea | Register | Failure
Description
Learn how startup idea is originated, various stages, funding, register and what leads to its failure
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Jatin Sri
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Jatin

I am a blogger in Digital Marketing where my focus area is Search Engine Optimization and Yoast Readability analysis.

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