Day: April 11, 2017

Statistics show a staggering 75% of all venture-backed startups failed. According to Patrick Henry writing for Entrepreneur, there are a standard set of reasons why they struggle and fall, and there is a myriad of factors that make a company successful.

According to Statistic Brain, more than 50% of all US startups failed after just five years of business, and over 70% end after ten years.

Research found that the most common causes for a startup failure are “lack of focus, lack of motivation, commitment, passion, too much pride; resulting in an unwillingness to see or listen, taking advice from the wrong people, lacking good mentorship, lack of general and domain-specific business knowledge: finance, operations, and marketing, and raising too much money too soon.”

The findings focused very much on the decision-making process of the business owner, their knowledge, and the support system surrounding them. The key to ensuring a startup is successful is by getting the right people on board, followed by the capital needed to help it succeed.

CB Insights looked at the reasons why startups failed, and the evidence was startling, pinpointing leadership as the fundamental flaw. Results showed that failure was due to “no market need, ran out of cash, not on the right team, got out-competed, pricing/cost issue, poor product, need/lack business model, poor marketing, and ignored the customers.”

The reasons for why startups failed to seem rather obvious and the answer we’re all looking for is why and how they succeed, and if there is a formula to emulate. Of course, each business is different and is subject to its industry, but research is helping business owners get a firmer grip on their business to prevent it from falling at the first hurdle.

Patrick Henry says that the Harvard Business School’s Performance Persistence in Entrepreneurship states that serial entrepreneurs who have prior successes are more likely to have future success and that the best venture capitalists are more likely to back them. New startups, of course, have less achievements.

According to the Startup Genome report, which looked at 650 tech startups, they pinpointed 14 indicators of success: “Founders are driven by impact, resulting in passion and commitment; commitment to stay the course and stick with a chosen path; willingness to adjust, but not constantly adjusting; patience and persistence due to the timing mismatch of expectations and reality; willingness to observe, listen and learn; develop the right mentoring relationships; leadership with general and domain-specific business knowledge; implementing “Lean Startup” principles: Raising just enough money in a funding round to hit the next set of key milestones; and finally, balance of technical and business knowledge, with necessary technical expertise in product development”.

The main reason for start-up success has got to be money. The money you invest in your business to employ the best people to drive profit is key. Yes, there are business owners who run them into the ground through lack of knowledge, but the main reason for failure is focused on lack of investment. If you’re well connected and able to secure funding or have the right resources behind you, then you’re more likely to succeed.

According to Gallup, the entrepreneur’s role is very, very important to a startups success. Their business-savvy knowledge is key to helping the business succeed, and their ability to secure funding and bring in the right people are crucial elements to ensuring a new business prospers.

The New York Times says investors have started to tighten their belts this year. The amount of money invested in US-based startups fell in 2016 for the first time in four years as the number of deals secured dropped to their lowest levels since 2011. However, the technology revolution has sent high hopes through 2017 and beyond, and analysts insist it will be a brighter business future.

Building a successful startup is more apparent in the digital-based sector, or at least to secure the funding you would need a digital-based business plan. As companies like Snapchat and Facebook go public and venture capitalists amass wealth to fund new projects, there is more money available to support innovation, which in turn drives the economy.

Pro bono develop leadership is fast-becoming a way for organizations to fulfill their corporate social responsibility quotas. Many responsible and respected firms are using the practice to send their top talent into the big bad world to make it better.

According to Crain’s New York, organizations like the Taproot Foundation provide a network of corporate volunteers across the United States. Taproot also coordinates skilled volunteering programs for Fortune 500 companies, connecting them with nonprofits in need of strategic savvy workers.

“[Companies] are using pro bono develop leadership, nurture high-potential employees and create more strategic ways of giving back to the community,” Liz Hamburg, President, and CEO of the Taproot Foundation, said.

According to the Committee Encouraging Corporate Philanthropy, the percentage of US companies offering pro bono develop leadership or skilled volunteering programs grew from 43% in 2013 to 54% in 2015 and is set to maintain this percentage during 2017 and beyond.

Employees who take on pro bono develop leadership work are often viewed in a favorable light by bosses, and it could help their future promotion prospects. Workers are usually paid in kind, through gifts or company incentives and bonus schemes.

Most importantly, Corporate Social Responsibility (CSR) initiatives instill a sense of personal fulfillment, and the long-term social impact these contributions make is harder to measure.

“It’s a struggle to measure the effect on the overall outcomes of an organization,” Hamburg said. But, pro bono develop leadership work provides new challenges for the next generation of leaders; opportunities firms don’t tend to offer internally.

By taking on CSR initiatives, organizations enhance their ability to attract and retain talent, especially among the younger workforce who are now keener than ever to take on essential and worthwhile positions.

According to the Huffington Post, if a small or large company has pledged to provide pro bono services, connect and learn from their experiences. If you are concerned about your organization’s capacity to manage a skill-based volunteer program, then look at other organizations willing to open their program to outside volunteers.

NBCUniversal recently took part in one such scheme where 39 members of the company’s HR staff participated in a day of “flash consulting” to 15 nonprofits.

One beneficiary of the NBCUniversal program was tech-training organization Per Scholas, which used the opportunity to devise a policy for telecommuting employees. “We had preconceptions about the way to do it,” Michelle Pullaro, the nonprofit’s chief administrative officer, said. “They helped us think through how to implement it to make it fair.”

According to Crain’s, the benefits for corporate employees goes way beyond leadership, with many “volunteers saying they came away with a greater appreciation for the challenges nonprofits face and learned to tailor their advice to organizations that lack armies of workers able to implement new strategies.”

Corporate leaders are often calling for small and medium-sized businesses to join the conversation and call for skills-based volunteers across America. Pro bono develop leadership work may be frowned upon as a way of exploiting free labor, but it is certainly going a long way in helping companies fulfill the CSR initiatives, better their operations and contribute to a better society.