The start-up is a process of an entry into a market by the newly created company in a relatively short time, usually with minimal investments with an innovative project. The majority of start-ups originate from the USA by virtue of a well-developed infrastructure, access to talented staff, a huge number of potential buyers, and the most influential media and knowledgeable group of investors.
However, 90% of all businesses are closed down in the first 18 months. A lot of founders commit errors because of ignorance or an insufficient run-up to conduct their own business.
Let`s consider a few issues faced by inexperienced start-up creators in the USA.
Ideas Imitation. Many start-ups, as a matter of fact, are only simulations of already-existing companies. The aim of every start-up is to come up with a new, revolutionary idea and bring it to life. Unfortunately, today it is difficult to come up with a completely unique idea, so every successful start-up is a variation of an already existing idea. A good idea with a bad implementation is worse than a bad idea with a good implementation.
Inadequate funding. Ideas and concepts are not enough for the investor. To receive the funds, it is needed to provide estimated capitalization, the stages of company development, the general state of the team, the timing, and the possible result of each task. Accordingly, without a clearly defined plan of action, it is impossible to predict the costs and revenues of the company, to know when the break-even point will be reached, and when the investment will pay off. Marketing strategy also should be described – the target audience and calculations of an advertising campaign. As an example, it can be the company Wattage. The founder created a beautiful pitch deck in order to turn attention to his innovative project. But despite all efforts, investors refused to provide reasonable financial resources (Lorenz, 2015).
Lack of leadership qualities of the founders, weak management, and marketing, an ill-sorted team of employees and conflicts that occur between the founders. If the self-build system does not work, it is better to involve outside experts – to invite the company of people with experience. A good example here is the attraction of experienced manager Tom Kalinsky for the post of director at SEGA American division. Kalinsky managed to break the monopoly of Nintendo in the US video games market for several years and brought SEGA to market leadership. At the peak, the company controlled 65% of the world’s market of gaming consoles and video games. This result was achieved due to competent management, a well-designed system of marketing campaigns and the creation of new products in accordance with consumers wishes.
Large corporations lobbying. Lobbying of large corporations interests in the US parliament and local governments that creates complications to consolidation in the market of the new project. If the start-up is regulated by the government, it is critical to have in your team professionals with good government relations who will successfully communicate with government stakeholders. These actions should be done as early as possible – it will guarantee the success of the start-up. Before the launch of a product in a new state, the start-up should introduce themselves, explain how the business works and get an approval of their new products or services. For example, Uber is the most highly capitalized start-up, but the company still has problems with new and existing government regulations and legislation. The main lesson of this situation: no matter how much money and energy you have put in your business, the government will always have more power, so don’t forget to set good relationships beyond customer relations (Pierce, 2016).
Start-ups that are ahead of their time and not in demand with the consumers. This happens when the entrepreneur has not confirmed the value of product or service. Most projects do not have the value or it remains unclear. When the value of the product has not been confirmed, it is not clear whether people are willing to pay for a solution. And this is the main condition to consider the start-up as a promising one. If customers are not ready to buy, it is worth trying to reformulate the value proposition, to change the destination of a message or change the general concept of the project. An example is the company PoliMobile, which was designed to bring mobile marketing tools into the world of political campaigns, but fell short (Prins, 2015).
In spite of the above-mentioned problems and difficulties, the United States has succeeded in creating conditions for the prosperity of the venture business and innovative start-ups and the number of people willing to take risks and realize the American dream.
- Lorenz, T. (2015). Everybody kept telling this startup that its pitch deck was beautiful – but they didn’t invest. Retrieved from source
- Prins, C. (2015). Timing is everything – especially in startups. Retrieved from source
- Arika L. Pierce (2016). The Startup’s Guide to Government Relations. Retrieved from this source
Contributed by Sandra Walls on behalf of https://essayshark.com/.