3 Fundamental Challenges Start-Ups Face In The Ideation Stage

How does one clearly define what a start-up is anyways?

The term "start-up" is neither an all-encompassing phrase for any young business, nor does it solely refer to these businesses in the tech sphere. Instead, start-ups are businesses often designed to grow speedily and scale exponentially, usually without geographical constraints. Some time you might hear that a business has a VC-backable model, or a highly scalable model (in opposition to a "lifestyle business", with slow steady growth). As the name also suggests, start-ups are companies or ventures that are still in their infancy, existing for relatively fewer years than larger and more well-known companies.

Most start-ups, if not all, are (or should be) focused on a single, unique product or service that the entrepreneurs want to bring to a market, provided someone wants to pay for it. According to CB Insights,?about 35% of start-ups fail because there was no strong enough need for the product or service the company was trying to build, and hence, no one wanted to pay for it.?Later down the road, a start-up may be acquired by a larger company, where they receive additional corporate support which include things like additional capital, management and support. Though this is possible, some start-ups do end up going on to be fully independent, such as in the case of Airbnb.

Speaking of growth paths for start-ups, one key stage in their early life development is the "ideation stage". The ideation stage is of paramount importance - it entails using creative ideas to do something differently, and hopefully better. Most notably, this stage involves seeing problems and opportunities, brainstorming around the identified problem, and doing research to test your assumption about the market, customer, and your viewed ideas. But some things are easier said than done... Here is a short, non-exhaustive list of common issues that crop up when a start-up is in its ideation stage, as well as some things to consider when it comes to countering these challenges.

Reason 1: Lack of Focus

Oftentimes, start-ups make the mistake of going too big with the ideas immediately. Some try to start more than one business at once or start a business that requires more funds when they have a small capital to begin with. In fact, according to CB Insights , about 38% of start-ups fail because they ran out of funding and fail to raise new capital, making it the largest reason as to why start-ups fail.

Given that start-ups by nature are usually sinkholes of cash in their infancy, a business idea ought to be personalised to the founder to leverage on their strengths, interests, access to capital, and connections. Having one clear, well thought-out idea is better than having multiple half-baked ones. That way, precious resources won’t be wasted, and development can really begin!

Uri Levine, the Co-Founder of Waze once said, “Fall in love with the problem, not with the solution."

Reason 2: Poor Product Market Fit?

The second challenge that founders of start-ups face is identifying if the current market has a demand for the product or service that they are trying to push out. The same study from CB Insight reports that 35% of start-ups fail because there is no market need for their ideas or products.?

There are a few things for aspiring entrepreneurs to take note of. If having an idea of what to do was the first step, being able to strike a balance between that and what the market needs is the second step. Understanding market trends is crucial; but that does not mean that a large, professional marketing firm has to be hired from the get-go. A freelance researcher who understands the trends and the gaps in the current market should suffice to give the start-up a sensing of what they should do.

In the same vein, the founder of a start-up should not be too impassioned by their vision that they fail to see the shortcomings of their ideas. A start-up is ultimately a balancing act between the needs of the people and the passion of the business – which leads us to our last point.

Reason 3: No Sustained Passion

Although the smallest cause of failures, burnout and the loss of passion can even occur to companies that are making a profit. Doughbies , an on-demand cookie delivery service which raised $670,000 in 2013, cited "a lack of passion from its founders and team as one of the reasons for its failure."

“The company appeared to be doing well, with 36% gross margins and 12% net profit at the?time it shut down. The problem was that there wasn’t massive growth or enough interest in running the business,” as CEO Daniel Conway put it.

In the end, finding something that you are passionate about,? all while being able to turn it into a business is no easy feat. However, it is exactly what is needed in order for a start-up to keep moving and growing and ultimately adapting to the ever-changing market landscape; that is why creating a start-up is a Goliath task in and of itself! In the end, there are probably never-ending lists of reasons as to why start-ups fail; I merely highlighted the ones that have a large impact on entrepreneurs on the individual and team-level, that are commonly seen. Anyone can create a start-up – it’s another thing to make sure it survives!