4 Reasons Most People Should Not Build A Tech Startup

I started in business at an early age, I am by nature a very techy person – I’ve always been good with computers, I used to do some programming on the side – yet I believe there’s a false romance about being a tech startup.

Being a “Veteran” young entrepreneur, I’m constantly meeting other young entrepreneurs who are just starting out and chasing the startup dream. Stories like Facebook, Spreets, Groupon, Twitter and Google has everyone excited and jumping into the world of startups but I’m not so sure that this is a good thing.

Are all startup’s bad? No of course not.

Are they for everyone, No… and here’s 4 reasons why:

  1. They are the Exception, Not The Rule. For every startup story you hear that raised capital and was sold for millions, there are hundreds – if not thousands – that fail, didn’t raise any capital or, even worse, continue to scrape by, having the founders lives sucked away through hard work.
  2. What Lifestyle Do You Want? While it’s exciting to start a new idea from scratch, running on adrenaline, 2-minute noodles and red bull, eventually the fun and excitement runs dry and the hard slog kicks in. Many startup companies turn into business traps of not 9 – 5 days but 80+ hour weeks, doing all the everyday detail and working hard to get their startup funded and off the ground.
  3. Lot’s of Little Transactions. A mentor once said to me that succeeding online and in a tech based startup it’s about lots of little transactions. When I hear that I actually hear “Lots of Time and Effort”. Why spend $200,000 building an app you are going to sell for $0.99 that you make $0.69 per download, so you have to sell 289,855 downloads just to cover the costs of building the app. When you could sell 100 people something for $2,000 and achieve the same revenues, with less upfront costs and be profitable sooner.
  4. It’s About Cashflow & Profit not Raising Capital. So someone invested and gave you a bunch of money and now you can go build your business. That’s great, but that doesn’t make you profitable. Forget the continual search for an investor just keep your overheads low, build a positive cashflow cycle and get your breakeven to be only a few sales so you start being profitable sooner and you won’t need the capital.

Of course startups and continual innovation are important, but for most it’s not the rockstar lifestyle and the easy success that they think it will be.

Am I saying don’t get into business?

Absolutely not… just be more strategic, consider buying an established business with cashflow already coming in, use your innovation and skills to build the business and more importantly serve your lifestyle.

If you want to know how to buy a business without needing millions in the bank, then check out our free webinar.

About The Author

Carl Taylor

Carl is the Author of Red Means Go! and founder of Business Builders Academy. He invests in and runs a number of businesses, and regularly teaches business skills through online training and live speaking events.