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Why Startups Fail – Timing: Could The Cause of Our Entrepreneurial Success Also Be the Downfall?

September 19, 2007

Our society has become a very impressive collection of forward thinkers and entrepreneurs. Each day the news highlights an impressive array of creativity employed by entrepreneurs solving problems and leveraging new technologies. We are fortunate to live in a country that promotes entrepreneurism and greatly benefit from its numerous advantages.

Over time we have developed many supporting systems that allow new companies the ability to spring up literally overnight. An entrepreneur who has an idea today can go online and apply for a business license, reserve a URL, design a logo, develop a simple website and have their new website online by tomorrow. With a variety of plug-in tools, their site can have shopping cart capabilities and dozens of inbound links from supporting blogs, google ads, and partner sites driving traffic within 24 hours.

This is also true in the brick and mortar world, where companies can contract with product designers, negotiate with manufacturers, and partner with distribution channels in nearly the same time period. And any great idea can find funding from a variety of sources and close millions of dollars of funding in less time than it takes to complete a pregnancy or harvest a single crop.

However,  it requires a certain amount of time for new markets and new products to mature and to grow roots. Too often we have a million flowers that bloom, wilt, and die long before potential customers are even aware of their existence. (Of course, if we wait too long the world is buying flowers from our competitors as well.) Unfortunately, the time frame for return on investment and market/revenue growth is much shorter than the time it takes to entice new customers and build a solid company foundation. Our investment mentality is rapidly approaching our appetite for consumerism…”now, if not sooner.” New companies often move too quickly, peak too early and die on the vine have spent their money and depleted their resources and patience before they are able to generate significant traction.

Could the same entrepreneurial success and supporting infrastructure that created such rapid-growth ventures as Google, eBay, and Amazon also be responsible for limiting long-term nourishment. Could our focus on immediate implementation and rapid results be responsible for denying new business ventures the time and resources necessary to develop a significant root system to sustain long-term growth?

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