{"id":85792,"date":"2016-08-26T09:09:02","date_gmt":"2016-08-26T14:09:02","guid":{"rendered":"http:\/\/www.ict-pulse.com\/?p=85792"},"modified":"2017-04-07T19:19:07","modified_gmt":"2017-04-08T00:19:07","slug":"5-reasons-tech-business-successful-fail","status":"publish","type":"post","link":"https:\/\/ict-pulse.com\/2016\/08\/5-reasons-tech-business-successful-fail\/","title":{"rendered":"5 reasons why tech business can seem successful but yet fail"},"content":{"rendered":"

A brief examination of some of the reasons why tech businesses still close although they appeared successful. <\/span><\/i><\/p>\n


\nYou have experienced it before: a tech business has been getting rave reviews for the products and services it offers. It has been growing rapidly, not necessarily just in North America, but worldwide, and appears to be well underway to become a global brand. However, and seemingly out of nowhere, the talk emerges that either this business has yet to make a profit, or has been incurring massive losses year on year. While it may not mean that such a prominent \u00a0operation will shut down anytime soon, especially those based in North America, it does lead one to question whether, at the very least, it will ever become viable?<\/span><\/p>\n

The impetus for that question is <\/span>Uber<\/span><\/a>, the online transportation network company. Though the firm is over seven years old, a report in <\/span>Engadget<\/span><\/a> earlier this week noted the firms has lost USD\u00a01.27 billion in just the first half of 2016. Further, it lost around $2 billion total in 2015, \u00a0and over $4 billion since its inception.<\/span><\/p>\n

Having said this, Uber is not unique, there are a number of popular tech businesses, such as Twitter, that are in the same boat. Here are five reasons why some popular tech businesses can appear successful, but are not financially viable and ultimately will fail..<\/span><\/p>\n

1. \u00a0Firms too dependent on external funding<\/span><\/h3>\n

While this point might not obtain in the Caribbean, where funding options are still limited, in other parts of the world, particularly more developed countries, firms do not have to be as focussed from the outset on profitability. Thanks to the funding ecosystem available, the emphasis tends to be, how can the business owners and investors successfully exit the business eventually and recover their investment. Consequently, their long term goal tends either to be acquired by another firm, or to bring the business to a point where it can make an Initial Public Offer on a stock market.<\/span><\/p>\n

2. \u00a0Too much focus on market share and not viability<\/span><\/h3>\n

Coupled with the previous point, many tech businesses, and also industry experts, appear to focus, almost exclusively, on the market size – the number of customers or subscribers a business might have – and gloss over the issue of its viability. Though the majority of startups, generally, fail to make a profit for at least their first two years of operation, it ought to still be their endgame. Further, though the popularity of a business\u2019 products or services among consumers can position it to be financially successful, the model being applied must be sound enough to deliver those results within a reasonable period of time.<\/span><\/p>\n

3. \u00a0Businesses are fighting for the same advertising dollars<\/span><\/h3>\n

To a considerable degree many tech businesses, especially those that are delivering their services online, or via mobile\/cellular phones, tend to be overwhelmingly dependent on advertising revenues to finance their operations. Although spend on digital advertising in the United States is estimated at USD 69 billion for 2016, and will increase to over USD\u00a0100\u00a0billional by 2020 (Source: <\/span>eMarketer<\/span><\/a>), it is still a finite pool, especially when the number of businesses that are dependent on this source to be viable, is considered. <\/span><\/p>\n

4. \u00a0Customers reluctant to pay the true cost<\/span><\/h3>\n

To a considerable degree, the tech space has evolved to the point where, depending on the product or service, consumers are reluctant to pay for them. This is particularly the case with mobile\/cellular applications, and social networks. Whilst freeness is useful to attract users and subscribers, it is difficult to build a sustainable business on such a model, as the previous points suggest. However, it can be difficult, or even detrimental, when fees or paid services are introduced, because consumers have become accustomed to not paying, and there may also be competing products that either are free, or are being offered a lower price points, resulting in a conundrum for many tech businesses.<\/span><\/p>\n

5. \u00a0Firms not prepared to cater to niche markets<\/span><\/h3>\n

Finally, as much as it can stroke the ego, is \u2018world domination\u2019 necessary, or good, in all instances? \u00a0All too often, businesses can get enamoured with the concept of scaling their operation beyond specific markets to cater to a global customer base. However, in order to do so, not only requires considerable resources, but one may find that the uniqueness of the product or service can get lost in the effort to expand the business worldwide. Hence whilst the potential gains that could be made by \u2018going global\u2019 could huge, it is also high risk, which very few firms survive.<\/span><\/p>\n

 <\/p>\n

Image credit: \u00a0Andrew_Writer<\/a> (flickr)<\/em><\/p>\n

____________<\/p>\n","protected":false},"excerpt":{"rendered":"

A brief examination of some of the reasons why tech businesses still close although they appeared successful. You have experienced it before: a tech business has been getting rave reviews […]<\/p>\n","protected":false},"author":2,"featured_media":80307,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[82,11,33],"tags":[71,53,34],"class_list":["post-85792","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-ict-tech","category-lists","tag-businesses","tag-competition","tag-lists-2","et-has-post-format-content","et_post_format-et-post-format-standard"],"jetpack_publicize_connections":[],"aioseo_notices":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/i0.wp.com\/ict-pulse.com\/wp-content\/uploads\/2015\/11\/Closing-Down-Sale-by-Andrew_Writer-flickr.jpg?fit=640%2C426&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p2iE1G-mjK","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/posts\/85792","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/comments?post=85792"}],"version-history":[{"count":3,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/posts\/85792\/revisions"}],"predecessor-version":[{"id":96977,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/posts\/85792\/revisions\/96977"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/media\/80307"}],"wp:attachment":[{"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/media?parent=85792"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/categories?post=85792"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ict-pulse.com\/wp-json\/wp\/v2\/tags?post=85792"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}