Business legal services in Silicon Valley

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


Related Post

Legal Considerations Before Signing a Commercial Lease

10/14/14

Most entrepreneurs do not understand that in a commercial lease the leasing agreement is whatever the parties decide. There is considerably less legal protection for a business in a commercial lease than in common r

LEARN MORE >

A Legal Expert Should Be Reviewing Your Businesses Documents and Agreements

10/14/14

Here’s Four Really Good Reasons Many businesses don't often hire independent counsel to review their business documents. The documents in question can range from a simple sales contract between your company and

LEARN MORE >

Will a T-Mobile/Sprint business merger get approved?

10/14/14

Two major U.S. wireless carriers are reportedly almost ready to submit a proposed agreement to antitrust regulators for approval. This mega business merger between T-Mobile and Sprint is projected to draw negative comme

LEARN MORE >

© 2019 THE LAW OFFICE OF LYNNETTE ARIATHURAI            SITEMAP               DISCLAIMER

Serving Businesses and Start Ups in the Greater Bay Area including Fremont, Hayward, Union City, Castro Valley, Milpitas, and Newark, CA.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. Contacting us does not create an attorney-client relationship.