First Things First: What to Prioritize When You Build Your Own Company
When speaking about fast-growing companies, we have to admit that all companies, regardless of their scale, encounter many challenges in order to survive. One of the reasons that many businesses fail to maintain their survival is bad management. Let’s take a look at the Blackberry case: a company that unfortunately sunk because of their poor leadership. Or, take a look at the Compaq case: a company that once was the largest PC supplier in the 1990s. Compaq was discontinued 11 years after Hewlett-Packard acquired it, back in 2002. Often the business owners lack the skills to manage their own business, thus ensuring the business faces failure.
In Indonesia, the most-rapidly growing—but also potentially risky business is the agency or software house. Statistically speaking, in 2017 there were 143 million internet users in Indonesia. In other words, more than half of Indonesia’s population were digitally connected. That is why being digitally visible is important for businesses to reach their potential consumers. However, the reality is some businesses may not be fully resourced to do that, this is how the software houses find their roles. Software or agency company help us—the business owners, to utilize the technology and to develop the business with more effective marketing through its professional and experienced team.
Why most early agencies eventually failed
However, despite the great potential of software houses, we have to be fully aware that as a business model, they carry a lot of risks. One of the potential threats is that the agency or software company has to be dynamic to follow the ‘demanding’ rhythm and not everyone will be able to upscale because of this. Thus some providers may be forced to shut down in the middle of their business.
Now that we have a brief about software provider or agency companies, both those who may not succeed and also those that may, here are some reasons why startups fail:
Based on CB Insights, 70% of startups failed only 20 months after their first financing. On the graph below is the summary of why startups failed as summed up by Forbes and Statisca.
The second most common reason that startups go bankrupt is that they run out of cash. A whopping 29% of startups are listed as closing down after running out of money. This happens when startups spend money unwisely. Inevitably, stupid spending leads to a low capital situation in which the CEOs look like a failure.
Team issues can also be a leading cause of startup’s failure. Poor teamwork and/or wrong leadership might lead to a lot of wasted money and energy. It is, of course, the team leader’s obligation to determine the goals and strategy for startups, so if a founder is blindly supporting one-side or dominant in only one thing it can make the team function poorly.
As you can see from the graph above, these are not only the reasons. Nevertheless, they are the most common possibilities to avoid when establishing your own business.
Setting up your priority when building your startup
When it comes to managing startups, we have to be focused on the solution. What solution do you offer with the presence of the startup? What kind of people do you actually need to help you manage your company? It is up to the founders to define these parameters.
The very first step you can take is to have full knowledge of how the industry works before you decide to create a startup. Define what your vision and mission are. Afterward, make sure you employ the right people.
The next important thing for the founder is to decide whether he needs a co-founder. If the founder is ready to share the spotlight so that the startup can grow, a co-founder might be necessary. Summarizing from inc.com, to choose the right co-founder, you have to define your core value and the tradeoffs you’re prepared to make to get your wanted value. With those pieces of information established, you can decide what kind of personality type you may need to be your partner, not forgetting to be fully-understanding about your personality as well. You should also plan how you want to deal with circumstances you may face in the future.
Expand your knowledge in the next TechTalk
Indisputably there is a lot of information to consider when it comes to building your own business. A lot of discussions may need to be had, not only about the team and management but also many other subjects. That’s why the subject of how an agency/software house can grow and become self-sustaining in this highly-competitive environment will be revealed completely in our next TechTalk. Make sure you don’t miss our next TechTalk at DILo Surabaya, 14th July 2018.