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There are a large number of start-ups incorporated in a year. But most of them won’t last long. Why so? What are the major hindrances to them? Following are a few reasons.

 1. No Research

They will not do market research and financial research. They straight away from some company or LLP and jump into the business.

 2. Poor Execution

There is no absence of ideas, there is poor execution. They will not start operating. They will wait for a perfect start! A perfect start never comes! Whenever they start it will be the perfect start.

 3. Multi-tasking attitude.

Most of them will have some other occupation. The start-up will be a side business for them. They will not show the same interest they had in the commencement of the project. They should have a hunger. They should be focused to earn the bread and butter from the start-up, then only that start-up will start working.

 4. Shortage of capital

Most of them will have good ideas but they lack financial support. They fail to form a better composition of investors, executors, and pioneers. There should be the perfect combination of all. They have to work in the market and finance.

 5. Over expectations

Too much expectation from the project is a big cause. They will suit up for the project with costs over and above the requirement. There should be financial awareness to start small with the available fund. Once they start working they can show their operational efficiency and can attract investors. Why does an investor blindly invest in an idea which not yet executed? So let’s start!

 6. No or less focus on Networking

They will not try to focus on building the network. Reaching the crowd is the secret to success!

 7. Losing hope at Introduction Stage

Most start-ups give up at the introduction stage. They will not wait to reach the growth stage. Initial failures, ups, and downs are common in business. One should not dishearten.

 8. Diversification at the wrong phase.

One should diversify his operation only if he reaches the maturity stage of the earlier product. Diversification in the wrong stage will cost more and end the whole project.

 9. Ignorance of cash flow

People will focus on profit and loss statements and balance sheets. No one is bothered about the cash flow statement. A cash flow statement is an indicator of financial health.

 10.  Serving or selling to defaulting customer

If sales or service is continuously given to a disloyal customer that is waste of resources. Which will push the project to financial loss.

Author Bio

I am a qualified chartered accountant. Founder and managing partner of NRSR&Co, Manipal. Expertise in Direct Tax, Indirect Tax, Project financing, Trust, Society, Banking & Co-operative society. Did my internship/articleship under Ramesh Rao & Associates. Also worked as associate with S View Full Profile

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April 2024