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10 symptoms that a Startup’s final days are approaching: Winners do quit

The Startup world is an unknown battlefield full of landmines. People say that the greatest glory is to get up every time we fail. It is true, we agree, yet, do not make failure a habit. Every big company has been a struggling startup once and had seen their bit of failures and persistence during their hard times had trained them to reach heights. There is a saturation point in failures too which indicate that you need to let it go. We analyze the most fatal symptoms which indicate the time to pull the plug and say “good bye!”.

It is easier said than done with a lot of emotional attachment tied to the startup. We say that your final days are approaching when the time and energy in the startup is just absorbed like quicksand and getting positive results has become an impossibility.

1. Money is how we keep score

According to Cooper, a serial entrepreneur and Vice President of Enterprise Services, Elanceo Desk, one of the primary signs that a startup would die is its inability to generate revenue, cut back on expenses, and access capital. His very own first startup suffered a very slow death due to this.

If your startup has started loosing too much money in too little a time and the expenses just shoot up without a chance of cutting down with the returns seemingly uncertain, you know what to do. At a point, when you have lost everything, the investors had started clamoring for their money back, there is financial exhaustion and any chances of sustainability looks too dim, there is no point in persevering further.

2. Popularity does not indicate profitability

Boo.com is a classical example for gaining attention but was not able to reap any benefits out of it. Boo.com, spent lavishly on its e-commerce site to increase the aesthetic appeal of the website. The result, there was an enormous flood of traffic visiting their site and no significant leads. When we analyze the situation, we could find that the conversions are not happening because, the right kind of crowd is not visiting you. This could be traced back to wrong targeting or a blunder in deciding the product-market fit.

3. Sudden decrease in customer usage

Remember Orkut! It started huge and was a pioneer and a leader of all social networking platforms of its time. Today, nobody uses Orkut. Even Google, the search engine giant who owned Orkut, was not able to withstand a strong competition (Facebook) with better features for the customers. The same way, startups fail when their vision no longer fits a market which has got an advanced product to use. When you fail to differentiate, when you fail to innovate, when you fail to satisfy your market and when your customers have lost interest in you, you know that you had become obsolete. If you observe an abrupt downturn like this, you can decide to cut the cord and quit.

4. Competition from Open source

If your product can be replaced by another competing product which is for free, you are in hot waters losing traction. Moreover, if your competitor can do so and gain profit at the same time, you are in deep waters. Any successful company will get a competitor that will undercut your prices.
Google Answers encountered a free competitor like Yahoo! Answers which were for free. Most people do not spend from their pockets if they don’t have to. So, it is always wise to give in to competition when you are not able to match them with pricing. A free product can never make you sustainable.

5. Product not a solution

Google Video Player failed due to the competition it faced from YouTube. Any video you like to search on Google Video can be spotted on YouTube, all the videos have transferred over. It enabled people to download videos from Google video and watch videos in full screen, which was difficult, earlier. But, the problem was that nobody needed an alternative. Moreover, it did not solve any problems.
Hence, if your product is not launched aiming at solving unresolved problems, you cannot thrive for long. So, we suggest you to quit.

6. Fighting Head-on with Big Boys

When a bigger brand senses a threat for its products from a startup, it is easier for the bigger player to go for a kill. The first thing that you could have experienced is a slash in prices followed by add-ons. When you cannot differentiate your product and you try to fight head-on with a bigger brand, you are facing your doom.

The same happened to Virgin atlantic, when British airways slashed prices aiming for a kill. But the founder, Richard Branson was too wise and had decided to quit. He did not quit the airlines business, but killed Virgin Records instead. The lesson we learn from this example is when quitting seems to be the only option, do not think twice.

7. Lack of a proper team

Many entrepreneurs try to ride more than one horse at a time and would take many roles in their business, afraid that an employee would not be able to share his vision. This would result in the entrepreneurs losing focus and concentrating on every small task which robs them of their time and energy which could have been used elsewhere with much productivity. The time which he could use to convince an investor is unnecessarily spend on either marketing activities or fixing a bug on his product. There arises a situation where you have bit more than you can possibly chew with no one to support you.

8. Jumping from one idea to the other

A startup entrepreneur is good at multitasking. When you do it too much with all the ideas that come to your mind and try to open more than one shop at a time, you have exhausted yourself beyond repair. Jumping from one idea to the other without learning from the present experiences is a risk many entrepreneurs take without knowing that it would only lead them to shut shop sooner or later. Feeding more than one startup at a time will result in irregular money flow in and out of the businesses, resource wastage and marketing hurdles. What you need is focus and you just have to quit one to gain from the other.

9. Bitterness between the founders

The founders share the companies vision and mission than any other person employed there and they act as role models for other employees. When they split, they take away the integrity the company had so far. This results in decreasing employee morale. The problem sometimes becomes so bitter that the result is no better than a suicide. The most common reason for the founders to get themselves into a lawsuit is their ambiguity in the shares which they ignore during the setting up stage. As a result, dissolving becomes the only way out to settle things.

10.Test the waters before you set sail

We know most of the startups launch in a cloud of hype which is actually useful, as kickstarting is really difficult. But many a times this hype puts your startup at peril. The reason being, it creates an illusion among the audience that this startup will not fail. So give it a shot to test your project on a small scale and spread, gradually. Startups that does not prove its potential in the test can sure, quit.

Testing waters also mean the right time to launch the product. Too early and too late is not advisable. Launching a product at the right time when the market is ready gives you results. Companies have become extinct by launching then too early like pet.com which lost due to bad timing and not because of the product. The late ones had become mere imitators and were not recognized as innovators.

If you see your ship sinking, do not let your team sink with it. Try taking the life boat instead and reach the shore safely.

To conclude,

We have not presented you an exhaustive list, they all illustrate patterns observed in autopsies of various pitfalls. Analytics shows that 9 out of 10 products of Google is a flop. But it took the courage to quit many of its products like Google Buzz, Google Video Player, etc. If Google is humble enough, why can’t we?

Once an entrepreneur, you are always an entrepreneur. It is better for you to quit now and quit early rather than being stubborn. You always have an option to start something afresh by learning from the mistakes. If you had quit at the right time and has experienced any one of the symptoms that we had mentioned, let us know.