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Zombie Startups?

10th August 2017

 This week The Guardian published an article on the concept of ‘Zombie Startups’ or rather businesses that fail to get off the ground (of which there are many). But why is this happening?

We spoke to our founder and one of our trustees and this is what they said:

 

Jerry Brand (Founder)

Sometimes failure can be down to the simple fact that the businesses idea has a poor product or service, which doesn’t fit the market in terms of location, timing and demand. It might also surprise you to learn that some startup founders don’t do enough ground research in the early days or they don’t have the right level of experience in the marketplace they are entering. A lack of business management skills can also lead to business failure in the end.

How do you know when something can be salvaged? You have to model your idea and see where the risks are by discussing the results with colleagues and/or advisors. From your business model, you will see both risk and opportunities. Internally you also have to learn as a team how to recognise and maximise up and downside. That’s how you gain confidence and teamwork.

Failure does make you a better and stronger entrepreneur, but the big one for failure is that you absolutely must control your cash. You also have to monitor and achieve your cost of sales, put sensible sales forecasts in and make sure you save and delay costs by bootstrapping at every opportunity, at least until you start to generate positive cash.

 

Fiona Stewart (Trustee)

Many entrepreneurs fail because they fail to properly identify and undertake the really rigorous planning and business modelling needed when setting up a new business. But I think there is also a ‘mindset’ overlay here too in that many start-ups ‘lose’ their early ambition. The article in The Guardian implies that these Zombie startups don’t necessarily go under but certainly fail to fulfil early potential as their motivations change and the founders decide that a reasonably sustainable business that pays them fairly well is good enough.

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