All too often, we faced with grim statistics about the failure of business startups. However, in this article by Arien Meyers, this does not have to be the case. According to him, business start up failure can be prevented by proper planning and money and people management.
The vast majority of startups will fail and the numbers are even higher in biomedicine due to the numerous risks involved in getting a product or service to patients in a highly regulated industry that involves human subject and clinical trials. Add to that the many barriers to adoption, dissemination, diffusion and implementation and why clinical trial results don’t translate into clinical use, and you can see why things are so risky.
However, Peter Drucker, in his book Innovation and Entrepreneurship (1985) pointed out several common reasons:
- MARKET-PRODUCT FIT: lack of market focus, the wrong product market fit, poor missing a customer segment
- MONEY: poor cash flow management not having an adequate plan or a non-viable business model to generate the necessary capital for growth
- MANAGEMENT TALENT: not having the right people and advisors doing what they do best and who are willing to tell truth to authority
- MATURITY: A founding entrepreneur who know his or her place in the scaling company and is willing to step away or down from the primary leadership role
I would add:
5. MODEL: the lack of a VAST business model.
6. MARKETING: Not doing what it takes to find the innovators and early majority and crossing the chasm
7. MANPOWER: not scaling the enterprise with the right people on the bus sitting in the right seats who can work in high performance teams
8. MONITORING: Missing a major market, demographic or technological shift
9. MINDSET: Not having an entrepreneurial mindset
10. MISSING YOUR BLIND SPOTS: Not making yourself disappear fast enough
The root causes are 1) you offer a product or service no one wants to pay for, and 2) you don’t have a VAST business model. Examples in sick care include digital health, medical marijuana, medtech, biopharma and care delivery products.
All of these wounds are self inflicted and can be prevented by proper planning and money and people management when you start your company. It starts with understanding your customer, creating a product that solves their problem, and executing a business model that is reproducible and scalable and that adjusts to changing market conditions.
If you begin with the end in mind i.e. a grown up and anticipate the stages of scale up and startup working backwards, you should be able to envision what you will need to succeed from the beginning.
This article was first published in innovationexcellence.com