Article on Gruenderszene.de about success and risk factors of start-ups
On Gruenderszene.de, which is Lukasz Gadowskisgerman blog about entrepreneurship, I wrote a longer analysis on the probability of start-up success and on the different factors of risk which can lead to start-up failure. Most important risk factors are in my eyes:
1. Risk of market entry barriers
2. Risk of (lack in ) resources
3. Risk of the idea (including technology and market risc)
4. Competition risk
5. Team risk
Depending on the business idea, risks in law and economics could also play an important role.
Anyway it is incredibly important to screen the risks of potential business ideas very thoughtful. All different kinds of risk should be evaluated separately. A failure of unsuccessful web2.0 start-ups is often that they underestimate the amount of entry barriers (especially network effects). If your (potential) business includes network effects you should estimate the necessary critical mass and calculate if your resources are enough to jump over this barrier. 1 day of detailed risk analysis could save you a lot of struggle later with adapting the business or even prevent you from spending some years of your life on the wrong idea…