Threats to successful startup: Business model failure

A startup is a temporary organisation in search of a scalable, repeatable, profitable business model to validate its existence.

In building your startup, don’t forget to note that as much as ideas are good their are as well cheap and anyone can come up with an idea.

The validity of an idea lies in the excellence of the business model.

Business model failure is as a result of either or all of this four concepts

Desirability: Build a consumer centered product

The absence of a market need represents the reason for failure of majority of start-ups.

No matter how life changing you think your idea is, ensure that it solves a problem that customers care about.

Feasibility: Do you have what it takes…

Do not set out to execute your idea if you dont have what it takes to see it to a success.

A proper feasibility studies before setting out will ensure all the variables are accounted for and nothing will catch the team unawares

Adaptability: Account for and dispel threats

Startups are naturally disruptive, but this doesn’t mean competition can be successfully ignored.

External threats such as government regulation can’t be ignored either, especially in highly regulated industries.

Viability: Profitability and scalability

While in the works, one key thing that needs to be mapped out is the profitablity and Scalability of your idea

Profitablity is the degree to which your business yeilds financial gain

A much as the startup model is to allow for a few years of non profitability to allow the business scale massively

This helps the business become insanely profitable when it eventually does.

However, the non-profitablilty should be kept in check as it is only profits that keeps a business going.

Amazon began to turn a profit after six years of business, Jumia using the same model is eight years running and has failed to post a profit since inception.

Scalability represents the ability of your idea to reach acquire more customers while spending just a little more.

Consider a SaaS business, once the software is developed, revenue can increase exponentially without much increase in cost.

This ability to increase in revenue with minimum increase in cost represents an ideas scalability.

Scalability is an essential in preventing business model failure as it is a key metric for attracting investors funds.

In developing sustainable business models, these four items must be considered extensively, Desirability, scalability, Viability and feasibility.

If you read this and it was worth your while,

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John Omokayode

Mechanical Engineering | Business Developer - I have a particular liking for the business side of everything. African businesses are capable of shaping the world economy!

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