Around the world, the statistics for start-ups are scary. About two out of three first-time start-ups will fail, usually because of cash flow problems and often because stuff happens that hasn't been thought through.
But according to Professors Ralf Seifert and BenoƮt Leleux from Swiss business school IMD, many of these problems can be anticipated.
Based on a forthcoming book, the piece Start-Up Hiccups says that much of the work needs to be before incorporating. Apart from raising the investment, a lot of that work is about networking with partners and networking with potential clients to ensure you understand the future market. Client relationships are absolutely crucial. But even then, entrepreneurs have to learn how to distinguish between the different sorts. It means knowing the difference between genuine potential clients and "technology window shoppers" who just want to learn about the market and check out their options. Makes sure you charge for your time from the outset. It sends an important signal. By all means talk to your customers. But beware that everyone will be willing to listen to you, if only for market intelligence. And also be aware that anything can happen at the start and stay cool. "Be prepared for people to abuse you as a start-up. Understand how you are going to be perceived by your customers and how they will treat you."
Having been involved in several start ups as well as having run my father's business as a 21 year old when he died, I found a lot of this advice confronting, thought provoking and refreshing.
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