Ask the Experts!
Here’s the question of the day.
Question: What’s the biggest potential indicator of future failure in a start-up business?
Answer: According to an article in Reuters, it’s the start-up company’s tendency to get too big too fast. The article’s source cites failures (Pets.com and Webvan) as examples of this tendency, and predicts another (Groupon) as a premature scaling that might lead to failure soon.
The attorneys at the ICS Law Group have a different perspective. When they see these characteristics in budding entrepreneurs, they become skeptical about the business’s chances for success:
- The start-up person or team does not have enough money for the business to survive until cash flow is self-supporting.
- The entrepreneur has a poor business plan—or none at all.
- The business organizers lack business savvy.
- Where there are two or more people starting the business, they lack a strong shared vision for the business.
Most businesses fail within the first five years. New entrepreneurs should seek advice before they start.
Have a question for the professionals at AUC? Feel welcome to submit it by email. We may post your question and the answer as the question of the day.