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Common Reasons Tech Business Startup Firms Fail in California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Wednesday, October 1, 2014.

Business is all about planning ahead. This is definitely true in the technology industry. Not only does planning ahead include an effective marketing plan and efficient operations plan, it also makes sure that business-planning strategies avoid some of the most common mistakes made by entrepreneurs in the technology startup industry in California. Doing so can ultimately make the difference between success and failure for a technology business startup.

One of the main reasons that technology startup ideas end up failing is that there is no need for the service in the marketplace. A recent survey revealed that 42 percent of firms failed due to failure to identify a target market. The more detailed a profile that a firm has for its target market, the more clearly the firm will be able to direct its resources and marketing efforts.

Another common mistake made by technology startups is having inefficient working capital. Almost 30 percent of technology firms failed due to not having enough cash to continue operations. Therefore, it is best to spend time in the beginning fundraising phases to ensure that a new company will start operations with a healthy amount of liquidity. This can allow business owners to have the flexibility needed during the startup phase, while also enabling firms to spend funds more effectively and strategically.

However, the best marketing strategy and operations plan may be useless if a business startup is not properly formed. This means that the company will have to comply with applicable rules and regulations specific to the new firm’s industry. Also, the correct legal paperwork will have to be submitted to the proper California regulating agencies.

Source: Baltimore Business Journal, “5 reasons your tech startup is likely to fail“, Sarah Gantz, Sept. 29, 2014

business failures, Business Formation & Planning, planning to fail, tech startups

Business Startup Companies Operate Virtually in California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Friday, November 8, 2013.

Technology has completely changed the way people work and do business. The creation of the Internet has enabled the advent of the virtual workplace. It is now possible for a business owner in California to have team members located all over the United States as well as the rest of the world. One new business startup has recently begun operating as a virtual workplace.

The company, Seeq, was started by the same entrepreneur who founded Insitu, which was later reportedly sold to Boeing for $400 million. Insitu specializes in creating unmanned aircraft. Now five years after selling Insitu, the successful businessman is running a business which is currently operating as a virtual company. The owner of Seeq says that working in a virtual environment reduces problems related to personality conflicts, which enhances efficiency and productivity.

Seeq is a data company that is aimed at helping manufacturers analyze data regarding their industrial processes. Manufacturing companies commonly require gathering large amounts of data in order to make adjustments in industrial processes. However, due to the size and nature of the data collected, it is difficult to put the data into a proper context when analyzing the data. Seeq aims to provide manufacturers with cutting-edge technology in order to put data into more useful context for effective decision-making.

Whether a startup business in California is a virtual workplace or a physical office space, it is important to have a comprehensive business plan. This can help a company gain a clear vision of where the business is headed now and in the future. Business startup companies can use a business plan as a guide while making business decisions based upon ever-changing circumstances. However, the business plan should also ensure the company adheres to all applicable rules and regulations required by law.

Source: GeekWire, Seeq raises $6 million, looks to help manufacturers mine industrial data, John Cook, Nov. 5, 2013

Business Formation & Planning, virtual companies, virtual workplaces

Innovative Services Need Adequate Business Planning in California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Friday, February 15, 2013.

When starting a business, it is important to consider all of the legal implications of doing business within the specified industry. Rules and regulations tend to differ for each industry and each type of business. Three new ride-sharing businesses found out how important this part of business planning is when the California Public Utilities Commission (CPUC) sent them cease-and-desist orders. The CPUC was concerned that these companies were not adhering to the same standards as similar services such as taxis.

Two of the companies which received cease-and-desist letters were Lyft and Uber. The CPUC claimed that companies such as Lyft and Uber were not adhering to regulations on taxis and similar services, which the CPUC calls ‘charter-party carriers.’ However, the ride-sharing companies argued that their services do not utilize the same business model as taxi companies and other similar businesses. They claim that the rules regulating charter-party carriers do not apply to ride-sharing services.

The dispute caused CPUC to fine several ride-sharing companies a total of $20,000 in citations. However, the CPUC had agreed to suspend the citations until rules and regulations for these types of services could be finalized. While new rules and regulations are being developed, the ride-sharing services have been allowed to operate under an interim agreement with the CPUC.

Ride-sharing services are not the only types of businesses which may be subject to regulations from authorities in California. Many of the more innovative businesses, such as these, may find themselves in a gray area of the law which has yet to be developed. This means that these types of businesses will require even more careful business planning in order to minimize fines and citations.

Source: The Verge, “Ride-sharing startup Lyft reaches agreement with California regulators, readies Los Angeles launch,” Bryan Bishop, Jan. 30, 2013

Business Formation & Planning, Cease and Desist, software companies, startups, tech startups

Startups See Opportunity Across California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Thursday, July 26, 2012.

Until recently, the startup word was dominated by those who resided in the San Francisco area. With companies such as Google and Facebook originating in the Northern California Bay area, it was no mystery why many entrepreneurs looked to that area as the place to commence their business planning for their own startup company. However, recently many entrepreneurs have begun to spring their business ideas in a totally different venue — the sunny beaches of the greater Los Angeles area.

The appeal of the Southern California area is simple for many startups. The location offers cheaper rent, better weather and miles of sunny beaches that draw in a diverse range of individuals. As a result of this appeal, a majority of the startups in the area are within two blocks of the beach, creating a vast network of individuals looking to become the next startup success story.

The growing popularity has caught the eyes of many Northern California-based companies including search engine giant Google. Recently Google purchased a popular Venice building in an effort to capture the momentum of the growing Southern California technology market. Google has stated that their movement into the area is to turn the nation’s second largest city into “a veritable tech center.”

There are an abundance of dreams that are being constructed in the minds of many tech-oriented entrepreneurs in California. It is becoming more evident than ever before that both the business planning and execution of that plan can occur in the booming Southern California area. With the appeal of Los Angeles and the growing number of like-minded people striving for success within that geographical locale, the dream can finally be a reality for more than just a select few.

Source: Delaware Online, “Life’s a beach for tech hotbed,” Jefferson Graham, July 22, 2012

Business Formation & Planning, business location, Business Startup, getting started, startups