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What challenges are terminal for startups—and what could be the cure?

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Digital and cloud-based technologies are common practices for all companies now. The last time a major business application was launched (not as a cloud-based application) was back in 2016. Eighty-four (84%) of small businesses stated in June 2020 that cloud-based applications are essential for their success.* 

There are 50 million startups each year and 20% fail at the end of the first year—50% by the end of the second year.** The DNA of failure falls into three core areas:

  1. product and marketing challenges (56%),
  2. operational and people challenges (26%) and
  3. technology, finance and legal problems (24%)

Even venture-funded companies fail 75% of the time—and they usually have the operational backbone skills and knowledge to avoid these traps. If you are an information-based startup, then the failure rate is nearly twice that of the finance sector.** 

But still there are many reasons for startups not to have a go at it. 

🤝 Is your tech startup’s team collaborating as effectively as it can to provide good customer service?

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You can beat these failure rates with one tool: Unified communications

This portfolio of traps and issues still don’t put off the 50 million startups that launch every single year. The boundless possibilities in front of startups outweigh these well-documented challenges, year in and year out.

But imagine if you could reduce the challenges and traps by 10% or 20%. Imagine the power to succeed in startups then, if you could cut out the basic elements that kill success rates? 

Solve collaboration issues first—it’s a startup killer

Put product fit failures and marketing problems aside. One of the four challenges mentioned in Failory’s research are actually under your control.

It’s collaboration.

In fact, if you can’t collaborate in near-real-time, then the tools that you’re using (voice, video, data) are part of the problem when they should be part of the solution.

A portion of the challenges we face every day are really communication-oriented in nature. If you could solve 50% of those, how much of a positive impact can that make on your survival rate?

Think about the dynamics involved in startup environments: 24/7/365 workloads, constantly evolving ideas and experiences. These all create levels of stress and ambiguity that confuse the collaboration process. Almost every startup faces this.

But how many corporate environments would talk about—and address—their failures in such a simple and clear way? It’s rare that any business would come out and attribute any part of their dysfunctions to “people problems.” But what if they made solving that issue a priority? The solutions are there. 

For example, UCaaS (Unified Communications as a Service) is a SaaS platform literally designed for 365/24/7 collaboration through the cloud, for any method of collaboration (messaging, video, phone with file sharing, and screen sharing, and more) for anybody in the team or frankly with external partners you might only work with for a week, a month, or longer. You get to bring the team members you care about into instant virtual meetings. (Keeping in mind that access to talent is the number one issue for startups.***)

Getting that talent to work together in a collaborative manner requires systems—that thankfully don’t necessarily require deep pockets. After all, startups generally start with less than $25,000***.

But the fact that startups don’t typically have an unlimited wealth of investment is also precisely the reason why key ideas like collaborative technology needs are left so far down the investment stack. (Even though they’re often the primary engine that drives collaborative success.) 

Now recognize that most startups, even if they don’t have huge teams, still work with freelancers, investors, partners, and more. Collaboration is an essential component for success—it shouldn’t be an afterthought. 

Marketing failure and product fit challenges can be partially helped

56% of the rationale for startup failure revolves around product fit issues and marketing problems. The lack of a systematic but fluid and agile way to collect, shape, and collaborate thinking about insights from the field means those first few precious moments where the product or service can sink or learn to swim are disproportionately affected by a lack of collaboration.

Imagine being able to have a simple conversation with your team, share documents, and see each other all at the same time—no matter what device you are on. That’s what UCaaS brands like RingCentral do, by supporting seamless integration with major platforms like Salesforce and many others to let you bring insights from customers and internal conversations all together in real time. 

Startups do fail. Often.

When you examine the reasons behind those failures, it is easy to ignore the obvious types of technology that can reduce the chances of failure. For example, collaborative technologies can bridge the gaps that cause most of the “people” issues.

Cloud-based models (like UCaaS) save money and enable you to easily share files and work together with temporary external experts you’ll need as a startup.

Remember, the extreme lack of startup capital (remember most do it on less than $25,000) does not mean you should ignore technologies you intrinsically know would help you. You can pay as you go. Even when we think about funded startups, the challenges that hurt them are often non-financial issues. 

Learn more about how tech startups are using RingCentral to collaborate more effectively with distributed teams and keep customers happy.

👀 Get this free solution brief to evaluate if RingCentral might be a good fit for your startup.


Enabling world-class collaboration should be a top priority for startups

And using UCaaS as the backbone for that enhanced collaboration should be a natural first step.

Without it, the chances of tripping up and failing on the one thing you can control (collaboration) are very high. Why not avoid it if you can?



*- Technomatics June 2020


*** –

Originally published Sep 23, 2020, updated Oct 05, 2020

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