Why do 90% of startups fail? If you want to know some of the reasons why startups fail contact the SaaS Law Firm Andrew S. Bosin LLC for a free consultation at 201-446-9643.
The staggering statistic about the failure of startups can be found doing a simple Google search.
What are some of the reasons startups fail.
The simple answer is money. Not to stereotype but a lot of startups are created by inexperienced individuals with not a lot of business acumen who might have a good idea but no clue how to run a business let alone manage its finances.
Take for example a SaaS startup. If you don’t have an owner of the company who is a really good software developer then you are looking at $100,000 to $300,000 to build a robust SaaS application. But, that’s not it. Every month you are going to need to do maintenance on the software to deal with bugs, defects or the latest iOs or Android push.
The problem with most startups is that they fail to roll up their sleeves and figure out exactly over the next two years every possible capital expense that could occur. And, most SaaS startups don’t realize how long it will take not only to build the software but just how long the typical SaaS sales cycle is. Most startups fall into the ego trap of thinking that just because they believe they have built a better mousetrap that customers will be throwing money at them to use their product.
It doesn’t work this way. Let’s say you did build a superior product and you are trying to convince enterprise customers to switch to use your product. Unless you are making all other products obsolete or giving your software away for free you are in for some tough sledding.
How so, let’s say you are trying to win a 500 seat license. It’s not only the decision makers you need to convince its the every day worker who has gotten very comfortable with your competitor’s software. And, chances are the company you are trying to convince to go with your company has expended a ton of time and money integrating its back end with your competitor’s software.
Do you see where I am going with this? Not to mention you have to figure out to get sales leads and what to do with them which is going to require your company to license automated sales/marketing software each month which is not cheap.
Then there is legal. Most startups just want the work done and will likely go with the cheapest legal option. If you do one of those DIY sites be prepared to have a real lawyer, someone who actually knows SaaS law correct and fix the documents you purchased.
This blog post is for informational purposes only and not offered as legal advice.
SaaS Attorney Andrew S. Bosin is located in New Jersey outside New York City and can be reached for a free consultation at 201-446-9643.