Conceptual understanding regarding the start-up businesses in the initial phases
An entrepreneur is a person who develops businesses, taking on financial uncertainities in terms of attaining the profit. There are different start-up companies in the marketplace that have higher growth. However, at the same time, there are different circumstances where a small company can fail. The company is looking towards different factors for booming at the marketplace. However, there have been inadequate resources in the company. The lack of understanding about startup business is the main problem of business failure (Isaak, 2016).
This investigation has emphasized on factors and problems that could be reason of failure in the startup business. There are adequate investigations on factor that can be reason of failing a startup business. In this investigation, internal and external factors have discussed. This investigation uses a secondary approach for gathering the data (Paoloni, &Dumay, 2015).
Problem statement
As per the survey, there are different investigations about failing the startup business. There is 4% of self-business related to startup business in Australia. However, 85% of these start-ups are declining at the marketplace. This failure may generate an unfavourable result in relation to wealth of nation. The GDP of a nation are declining because of these business failures. GDP of Australia is declining, which indicates an unfavourable situation of entrepreneurship in the nation. This issue is critically discussed in this investigation. This investigation is also emphasized on the factor related to failure of startup business (Kolvereid, 2016).
Justification
This research is beneficial for gaining the understanding regarding the start-up businesses in initial phases. It is significant to comprehend the problems of start-up businesses in the initial phases. It is effective for increasing the knowledge about the strategies for overcoming the problems of start-up businesses in the initial phases.
The main aim of this research is to assess the problems of start-up businesses in the initial phases. The given below are objectives of completing the investigation:
RO1: To explore the conceptual understanding regarding the start-up businesses in the initial phases
RO2: To address the issues of start-up businesses in the initial phases
RO3: To recommend the strategies for overcoming the problems of start-up businesses in the initial phases
RQ1: What is conceptual understanding regarding the start-up businesses in the initial phases?
RQ2: What could be problems of start-up businesses in the initial phases?
RQ3: What are the strategies for overcoming the problems of start-up businesses in the initial phases? Critical
Conceptual understanding regarding the start-up businesses in the initial phases
Problems of start-up businesses in the initial phases
According to Burns (2016), a start-up business is started by the entrepreneur as well as an individual founder through scalable and repeatable business model. A start-up is a newly emerged venture of business that key aim to build a feasible business model for resolving the marketplace problem as well as business requirement. A start-up is a corporation that is related to initiation of its operation.
On the other hand, Reynolds (2016) evaluated that start-up companies are funded by entrepreneurial founder because they contributes in capital for producing the products and services for which they think there is high demand. Because of inadequate revenue as well as high costs, company may face difficulty to sustain in the marketplace.
Problems of start-up businesses in the initial phases
According to Sánchez-Gordón& O’Connor (2016), poor marketing is the key problem of start-up businesses in the initial phases. It is addressed that new business start-ups use radio commercials and print advertisements without understanding the target market as well as without investigating other information on the market. Thus, costs related to marketing as well as advertising could be expensive. When a business cannot understand about target market then there could be chance of misusing the capital on print advertising due to considering false messaging and wrong appearance in a publication. It affects the business to arrive at the target market of company.
On the other side, Charter (2017) stated that managing work and home is another cause of start-up the business. A start-up business has requirement of an incredible commitment of time as well as strong determination. Further, financial distress could be faced by start-up business. In addition, start-up owner has an issue to balance the vast demand of company as well as requirement of family. When the stress within an organization is expanded then venture capitalists may experience the difficulty at home.
As per the view of Spender CorvelloGrimaldi & Rippa (2017), poorly rated products as well as services might be challenging with the big box stores; hence Startup Company may face the issues in terms of creating pricing strategy like these stores. The international, as well as nationwide corporations produces the products at the lowest price due to producing high amount of products as well as appreciate to supplier contracts. Pricing related to products as well as services can delay in increasing the profit. The company can ensure the start-up will excels in customer services rather than making the list of fair retail prices. The company should have convenient hours as well as position.
Research design
In contrast to this,Lüdeke-Freund & Dembek (2017) evaluated that competition is another issue of start-up businesses in the initial phases. There are high amount of small new businesses and less amount of larger new business. Start-up business should understand their competitors and assesses what the competitors are doing right. It would be beneficial for an entrepreneur to expand their ideas as well as make them better. It may eliminate the potential pitfalls like selecting niche market, eliminating rivalry, initiating a bad location and simply copying what the rivalry is performing. The competition can beat by start-up business in case there is no market for it and when the location does not create more demand for customers as well as when a startup business cannot easily be copied.
According toDarchen (2016), poor planning is another cause of startup business that can be managed by spending much time on it. The company should understand every aspect of the start-up before flipping open sign. It involves the estimation of operating costs like rent, supplies, and utilities, estimating finances and making the planning of initial marketing campaigns. A comprehensive business planning is significant for business. But, in current times, circumstances are changing so, there is a need to be flexible and creative enough for adapting.
Wei Wei & Western (2017) recommended that start-up business should investigate on the market trend, economic growth as well as average revenues. It should also take consideration on voids in the marketplace and creates strategy for business to overcome these voids. It should also use national, local as well as state resources like small business administration, personal mentors and SCORE. Since, start-up business creates a business plan as well as the business model for supporting and avoiding the revelation at the time of start-ups. In addition, it should address the core operations of the business, staffing requirements, required inventories and equipment requirements that aid to develop costs for each. Start-up business can use research findings in order to build strength as well as an attainable marketing strategy for capturing the ideal customers of a business, keeps customer base and target market.
In contrast to this, Bernstein Korteweg & Laws (2017) evaluated that the company should hire well-qualified individuals for their initial team. It may also select people who can serve multiple functions within an organization, particularly, in the first few months of business. It can also avoid over-staffing of the company in order to lead many workforces with not enough performance. It should also provide training to new hires to make sure the core operation of a business and to smoothly run the business.
As per the opinion of Lessing &Brege (2015), start up business should get to know their customers for overcoming the issue of a startup business in the initial phase. The company should learn everything regarding their customers as it would be beneficial for selling the products to their customers. The company can conduct the investigation on the customer base, their preferences, and dislikes and likes in order to cater the homogeneous customers by using the data collection method. It would be beneficial for making a strategic approach to get to know their customers and create better positioning to develop products and services, develop marketing messages, and reach and communicate directly to their customers.
On the other side,Salamzadeh&KawamoritaKesim (2017) stated that the company can write the business plan for overcoming the issue. When a company starts the business, it should investigate, write and put together a business plan for reviewing the business idea as well as the structure from different perspectives. These perspectives could be marketing, finance, and operations. For obtaining finances for the business, the company should develop written as well as formal business plan for demonstrating the investors and lenders. The company can assemble the business plan to start-up the strategy that details a vision for the corporation and with which, it can guide the business even if it does not need to apply for financing.
Research design
In this investigation, an investigator has used a mixed research design method as it contains the characteristics of both qualitative and quantitative research design. The qualitative research design is beneficial for capturing the theoretical information regarding research issues. It is collected by different sources such as journal articles, academic publication ,and online websites. And, quantitative research design is used to obtain the numeric information regarding research concern. It is gathered by using statistics charts and graphs (Boons, Chertow, Park, Spekkink, & Shi, 2017).
Research strategy
In this research, both articles and literature review strategy would be used to gather the secondary information regarding research issues. In this investigation, 3 articles are selected related to research objectives as it is beneficial for gaining the depth understanding regarding problems of start-up businesses in the initial phases. These articles are selected by online websites as it creates authentic outcomes. Furthermore, the literature review is another strategy for gathering the secondary information regarding research issues. For this, different journal articles, academic publications, and online websites are used. This strategy is used to support the article’s facts and figures as it generates authentic outcomes (Hyytinen, Pajarinen, &Rouvinen, 2015).
Data collection methods
In this research, only secondary data collection method is used to gather the information regarding research issues. These data are gathered by different sources such as journal articles, academic publication, textbooks and online articles (Kranz, 2016).
Sampling
In this research, a non-probability sampling method is selected to select the sample in a systematic manner. In this technique, the convenience sampling method is used for selecting the articles as per the convenience. In such manner, 3 articles are selected as a sample size for collecting the data regarding problems of start-up businesses in the initial phases (Powell, 2017).
Data analysis
In this research, content data analysis technique is used to assess the pooled secondary data regarding the problems of start-up businesses in the initial phases. This technique is beneficial for gaining theoretical understanding with respect to research issue.
Ethical consideration
In this research, research has used own words to avoid the copyright concern and attain the investigation in an ethical way. Furthermore, an investigator has provided an in-text citation in each paragraph for creating the validity and reliability of the research study (Cremades, 2018).
It is analyzed that there are the different reason for failing an entrepreneur. These reasons could be a failure to pivot, did not use the network, disharmony among team, pricing issue, and ran out of cash and no market needs. An entrepreneur can fail as they cannot disconnect friends from enemies. They cannot address EIQ from down. It is also identified that start-up business can face difficulty in terms of addressing part-time accountants and they have no initiative regarding how to analyze the skills and experience of legal advice (Andriole, 2018).It is addressed that startup business could be failed in case they unable to address smart loyal employees and co-founders who can optimize their contribution. Startup business can fail as they cannot separate dumb angel shareholders from efficient ones. There are a high amount of entrepreneurs who do not know regarding the competitors (For entrepreneurs, 2018).
The above statistic indicates the emerging startup rate in Asia in the year 2018. The emerging startup business shows the percentage of the population who are emerging entrepreneur at present such as actively engaged in developing business. This business cannot pay higher compensation, salaries as well as other payments to possessor for over three months (Statista, 2018).
The above chart indicates that there isa number of accelerators and incubators in Australia who has disproved over the last few years. In addition, Artesian who is Sydney-based venturalist revealed the level of activity in the certain region of Australia. Artesian has demonstrated publicly available information regarding the number of start-ups that have passed these accelerators since their opening (Kranz, 2016).
It is found that on the top of the list, there are two accelerators such as Slingshot and BlueChilli. It is addressed that Slingshot has processed over 118 startups since their initiation and BlueChilli has processed 103 startups. There are also certain names that are in a list of accelerators and incubators in Australia like Startmate, TechStars, SproutXt,and Runway Geelong (Hyytinen, Pajarinen, &Rouvinen, 2015).
It is also addressed that start-up business entrepreneur should have proper knowledge that can support in addressing the existing challenges such as the requirement for upgrading the current computer system and to hire and train the second level managers for keeping planned growth.
It can support in prospecting the key needs at several points such as inordinate commitment of time for the owner at the time of start-up period and need to delegate and transformations in managerial roles while corporation becomes more complex and larger (Salamzadeh, &KawamoritaKesim, 2017).
It is identified that this structure can facilitate a basis to assess the impact of current and proposed regulation and policies of the government on one’s business. It is also found that a startup business can exclude the dividends from double taxation that could be profitable with the intention of stability (Lessing, &Brege, 2015).
From the findings, it is evaluated that there are the different reason for failing a startup business in Australia. These reasons could be a failure to pivot, did not use the network, disharmony among team, pricing issue, and ran out of cash and no market needs. This finding is supported by the opinion of Spender CorvelloGrimaldi&Rippa (2017), as it was stated that poorly rated products and service can create complexity due to a large amount of stores hence Startup Company may face the concern due to developing pricing strategy like these stores. The nationwide and international company sell the product at a minimum rate due to a bulk of orders. Pricing of products as well as services can delay in procedure of reducing profit margin.The company can make sure the startup growth in customer services as compared to creating a list of fair retail rates. Startup business should have convenient hours and location to increase the demand of customers.
The above findings show that there is a number of accelerators and incubators in Australia who has disproved over the last few years. This result is favored with the opinion of Darchen (2016), as it explained that poor planning could be a key cause of startup the business that could be organized by investing amount and time on it. Startup business should comprehend each aspect of a start-up before flipping open signs. It entails the prediction of operating expenses such as supplies, utilities, rent, predicting finances as well as creating planning of initial marketing campaigns. An effective business planning could be beneficial for the company. However, in existing times, circumstances are transforming so that, there is a requirement for becoming innovative and flexible enough to become accustomed.
It is also found that there are five stages of small business growth. This helps in avoiding the startup business problem. This finding is also supported by the opinion ofBernsteinKorteweg& Laws (2017), as it was evaluated that the company can hire proficient people for their initial team. It can choose an individual who serves different functions at the workplaces, specifically in the first few months of the company. It can eliminate overstaffing of company for leading different employees with not sufficient performance. It can offer training to new employees for ensuring the core business activities to smoothly run in business.
Conclusion
It can be concluded that there are a different reason for failing a startup business in Australia. These reasons could be the failure to pivot, did not use the network, disharmony among team, pricing issue, and ran out of cash and no market needs. It can be summarised that there is a number of accelerators and incubators in Australia who has disproved over the last few years. It can be also concluded that there are five stages of small business growth. This helps in avoiding the startup business problem.
The obtained outcomes from this investigation will be beneficial for a startup business to overcome the problem of initiating the business in Australia. As, this research is based on startup business so that, a future researcher can use specific start-up a business of business to gain an understanding in depth. This may contribute to building the reliable and authentic outcome of research. The future researcher can use primary data rather than using secondary data for capturing the more reliable information regarding research issues (Darchen, 2016).
The limitation of the investigation can decline the quality of research result. There are different sources that may create complexity in conducting the investigation and attaining the aim as well as objectives. This research limitation could be lack of resources, time as well as cost. For example, secondary data gathering technique is expensive as it may create complexity to capture the depth data (Spender, Corvello, Grimaldi, & Rippa, 2017).
References
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