A research conducted in 2013 by Harvard Business School’s Shikhar Ghosh shows that 75 per cent of all start-ups fail.
This is a staggering percentage considering the fact that there are roughly 50 million new firm births per year! (Global entrepreneurship monitor).
Why don’t most start-ups see the light of day?
Is it because start-ups are not geared for exponential growth or is it that these firms are losing the eye on the ball?
Many ailing start-ups have stated that issue of “scaling” is one of the prime reasons for failure.
The inability to keep pace with growing customer demands have forced many promising companies to shut down.
As companies grow the common fear is that the entrepreneurial fire that drove the organisation forward would die down and organisation dogma would take over the firm.
Scaling up does not mean that start-ups should succumb to bureaucratic regimes, rather firms who are better prepared to face the growth will be able to experience a relatively smooth transition from a start-up to an established firm.
This could be done by hiring functional/industry experts to take the start-up to the next level, adopting a suitable management structure that ensures a smooth flow of information, incorporating and implementing forecasting and planning capabilities and building a cohesive culture that encourages innovation at all levels of the organisation.
It is no secret that profit is the ultimate goal of any company, irrespective of whether they are small or large.
However, the secret ingredient that defines the success of a start-up is its mission.
When looking back at the greatest entrepreneurs of our time from Steve Jobs and Bill Gates to Mark Zuckerberg, all of them had a purpose of changing the world in a way that was thought impossible.
Every day they were driven by their missions to bring forward a unique product/service that would stand the test of time.
In sharp contrast many entrepreneurs are in business with the sheer intent of making money.
In short if you do not have a larger purpose or a mission you are bound to fail!
Therein lies the conundrum of linking the mission to positive cash flows.
The secret is to first have a mission that would be followed by a business model and not the other way around!
As stated by Kevin Laws (2015) in an article in the Harvard Business Review, “The business model should exist to serve the mission, not the other way around.”
That’s how Google managed to organise so much of the world’s information in a few decades, and Facebook managed to connect the wired world in just one.
So if you keep your eyes on the ball, i.e. the mission and you prepare your company for the inevitable your start-up is likely to see the light of day!
Mr Cader is the chief executive of MTI Consulting