WHY DO START-UPS FAIL IN PAKISTAN?
Developing a start-up is an uphill task but what takes more energy than stabilizing the idea of success on statistics? Creating startups is not a new thing to the cooperative sector but making it a success is only in the fates of a few. Especially when you are in a third-world country like Pakistan it takes decades to recognize the talent meanwhile most of the time the glory of the talent never gets to shine.
The paucity of funding, scarcity of business possibilities, and scarcity of entrepreneurs skilled in creating successful product-based B2C (Business to Consumer) IT businesses is what makes a third-world nation such as Pakistan reluctant to knock off the doubts of the rising entrepreneurs. Neither there is any forwarding tradition of supporting the startups nor does the majority of the population get to put their thoughts on the table.
Nonetheless, the ones who realize their passion and opt for a startup are pushed down the slope of the harshest obstacles in the business sector. Eventually, 90% of the new companies confront the doom in Pakistan.
Let us take a focused look at the reasons why startups tend to fail in Pakistan
Lack of Big-Picture Thinking
One of the main causes is that the majority of businesspeople lack the “Billion Dollar Concept.” Most business owners lack a broad vision. Simply said, they have too small of dreams. This entails not thinking about going global, entering new markets, solving a “serious issue,” or marketing to a wider target audience.
Startups need to concentrate on issues that could get bigger. Their entrepreneurship is just a concern till the startup is launched; they do not have the big picture in mind, the vision of transforming this Venture capital into a global name.
Young businesswoman sitting on a whirling chair in an office with motivational quote hangings on the walls. The text reads: “You cannot build an office, give it a fancy name, design its interior with the most inspirational quote hangings, launch a single product and just sit on the whirling chair and wonder, why the company is not progressing. You have to know that when you are launching products in Pakistan, a nation that prefers international brands over their kids, you have to compete with globally renowned companies to make a mark. You have to aim for the moon and work strategically.
The Financial Plague
Finding a reliable investor is itself a cracking challenge and in Pakistan, it seems as the hardest task to do so. Although many entrepreneurs focus on the money too early while they need to find a competent team, that can uplift the company; A team that has the potential to work in harmony and present their company as the best in the whole sector. Disappointment hits the entrepreneurs when they realize that it does not matter how great the team is; until or unless they are ready to go through the grinding process of verifications and three times more documentation checks.
However, businesses that do receive investment ultimately fail due to the fundraising mentality of VCs and “investment firms” in Pakistan, not because their product was poor or their personnel was inefficient. Regional investors’ strategy of “take $40,00 and give me 53 percent of your corporation” may initially increase business, but it could later result in problems.
For instance, because they don’t have corporate rights, businesses find it difficult to get funding in later rounds. Investors subsequently wrecked the business. Now you are left with “management rights to zero success rate.”
Unfitting Business Location
A company in a terrible location would indeed have trouble reaching its clientele. If you are located in the wrong area, it will be difficult for customers to find you, and without customers, there would be no revenue. Additionally, the design of your building, the neighborhood in which it is located, and its proximity to rival businesses all have a big impact on your small-scale business firm.
Poor location is one of the main reasons for all business failures, according to SBA (Small Business Administration) studies. You must be prepared to shell out for a prime spot when choosing a site for your business.
The price of the place frequently indicates the quantity and/or caliber of the business you will produce. Not only for the clients but you have set the perfect location for your company to fetch the best employers in the town.
Duplicating the startup ideas
Sometimes the companies are so frustrated and lack a pair of fresh eyes that they end up copying successful startups. Many times, business owners spend hours exploring Google for a business idea they can copy.
This is typically what kills startups. Even if something is successful, it doesn’t mean that you will also benefit from it. The majority of Pakistani companies attempt to imitate new ventures and company models from nations like India. The economies and work cultures are not comparable to those in India, despite what their way of thinking suggests.
Let us take the example of the American-based company Uber; which was initiated in Pakistan and had remarkable impressions. But the rising star of Pakistan Airlift could not stand it and launched the clone program under the name of Careem. And now as of the year 2022, Airlift had to close its many programs involving; Careem.
As a startup, you need to be focused on your roadmap and follow your strategy. One of the reasons why startups fail in Pakistan is also that entrepreneurs are not clear about their ideas. They are not clear about the execution. You need to heed your plan.
Mal Management
The ability of the small business owner to make decisions and manage their firm is necessary to overcome each of the difficulties mentioned above. In addition to the previously mentioned problems, bad management in a small business can result in excessive financial use, incorrect resource expenditure, and failure to focus on your area of expertise, among other things. As a result, it could be challenging to predict every challenge a small business would encounter.
However, if you want your small business to succeed, you should overlook the concerns mentioned above since they have a big impact on it. Insufficient experience Keep a close eye out! Your company may suffer if you lack skills and are not skilled in the chosen field of business.
Thanks for reading this article by ExtNext, hope you will learn something about Why startups fail in Pakistan
