According to statistics, it is easier for a startup to fail than to succeed. Given the global funding narrative, it has become far easier for startups to fail in Nigeria, specifically in the south of the country, which has seen a low VC influx.
Oftentimes, startups forget they are businesses too, and rather than stay afloat through funding, they aim to launch products, raise capital, and retain the best VCs.
A startup is so exciting only when it succeeds. The satisfaction of filling a particular socioeconomic gap is usually the primary focus of founders. They cannot get it off their heads.
Startups are also colossal failures when they fail. There’s usually a narrative that they should not have failed. Oftentimes, failed startups presented smooth-sailing exteriors to customers and eventually announced shutdowns months later.
Overall, launching and sustaining a startup is never easy. The founder will often go through the dilemma of priority (people or profit: which one comes first?). This is not an easy road. However, striking a balance is not impossible.
Due to VC funding, startups can, by their very nature, be in an aggressive setting with a rush to produce hyper-growth. Those who can fly do so quickly. Those who fall apart do so unexpectedly. 20% of startups fail within the first two years. 45% of startups don’t survive the fifth year. 65% of startups fail within the first ten years.
Failure was not the founders’ intended outcome when they entered the startup game. It’s more likely that they neglected to make a profit, evaluate the viability of their business ideas, and develop a plan to lead them through the startup phase and beyond.
Many companies have had their eyes opened as a result of the post-Covid period, which emphasized the value of creating a sustainable business plan. The period offered new chances for entrepreneurs to reconsider their growth plans and concentrate on creating a long-term business model.
Startups can become profitable without needing external funding by putting a priority on revenue creation and expense management.
The majority of companies have the necessary resources (a strong brand, technology, and methods for acquiring and keeping customers) to succeed. Why don’t they sell for a profit?
One of the biggest errors that founders make is to ignore cash flow in favour of customer-centric expansion. This may result in a scenario where the startup is expanding quickly yet is depleting funds, which reduces liquidity.
Instead, concentrate on developing profitable items from the very beginning of your company. This will end your reliance on external finance and enable you to keep developing and improving the items in the long run. Maintaining a steady cash flow is crucial for running a business.
Most VCs are now looking for startups that will grow and are already profitable.
