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.