November 23 2021
Six Common Myths Concerning Start-Ups
The start-up formula is: “idea+investor+scaling=success.” Generally, start-ups are the thing for people in their twenties. Wait a sec, perhaps it was scaling first, and then investor? And after all, why not later? Read which myths concerning start-ups should be put to bed.
A start-up – in short – is an innovative enterprise, with the potential for rapid growth, which is looking for a business model (for less than 3,5 years) to ensure its profitable development. The definition above is pretty much universally accepted, but there is a number of myths surrounding it.
Myth #1: Start-ups operate from garages
False. Today’s start-ups commonly begin in private apartments or student dormitories, however these are usually just beginnings. Early success often makes them appear in coworking spaces, and after some settling down they often stay in the same places, in premium modern fully equipped and serviced offices.
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Myth #2: Start-up=IT
Start-ups all over the world are no longer unique to the information technology sector. An idea and skills in coding without the knowledge of psycho-sociological mechanics, as well as needs analysis, are simply not enough to succeed. Environmental technologies, biotechnology or the solutions for propagation of “sharing economy” have recently become the areas from where the most promising businesses sprout. Of course most of them operate, in one way or another, in a digital universe, however those operating away from the smartphone or a computer screen, are also growing in value. One beautiful example of a start-up idea realization are… the moss-covered structures in many places in Berlin and a couple other European cities. They are supposed to extract the smog from the air and decorate the city at the same time.
Myth #3: Start-up is the thing for people before thirty
According to MIT in Cambridge the average age of a start-up founder is currently 42. It is rather understandable – no matter how great their idea is, a 20-year-old business rookie stands little chance for success, because they simply cannot see certain risks. What is key to the advantage that mature business founders have? First of all, they know what psychological mechanisms help manage people effectively. They also know where to get the money from, how to manage projects, and whom to hire. Experience helps them achieve better sales and marketing results, as they simply have had the time to learn this stuff. Strong suits of the younger people are knowledge, enthusiasm, low own costs and lack of extraprofessional commitments.
Read also: How to choose a business model?
Myth #4: Start-up development in Poland is only possible thanks to the public funds
The history of Polish start-ups is burdened with many “sins” from its early years. Many visions and overly optimistic plans clashed with reality, and resulted in a catastrophe. Public financing allowed the beneficiaries to survive the required two yeas, but their legacy is all but gone. This made the current investors look at start-ups more cautiously, however there are actually more financing options than before. Trust is improving, the number of people launching start-ups without a well thought through business plan is going down, and the number of start-ups seeking funding elsewhere, for example crowdfunding, is growing.
Myth #5: 9 out of 10 start-ups fail
According to PARP (Polish Agency for Enterprise Development) report “Start-ups in Poland in 2019” we should definitely put this stereotype to rest. Investor awareness grows every year, and start-up creators themselves have done their homework in regard to strategic management. They know that the presentation alone is not enough to find an investor. Most of them realized that the project with a developed MVP (Minimum Viable Product) – the tested prototype – has the best chance of success. The belief that start-ups are the opportunity for rapid development for the Polish economy, becomes more and more widespread. A significant percentage of them hire profitability specialists from the very beginning, so their “survivability” currently exceeds 20%.
Myth #6: Covid will stop the start-up development
Even the pandemic turned out to be one of the factors changing the rules, rather than stopping the game. It brought an impressive e-commerce development, and directed many start-ups towards medical technology, prophylaxis as well as entertainment for people stuck at home. Start-up Poland Foundation data shows that 56% of the Polish start-ups declared acquisition of new clients during the pandemic and 48% increased sales.
To sum up, start-ups have always been associated with younger people and that’s unlikely to change. The founder of fotka.pl service started his business adventure in 2001 at the age of 20, and Michał Sadowski, the creator of Brand24, took his first steps into the business world in his senior year at university. As he admits, his only real cost was time, back then. It is easier to get funding than it was 5 years ago, and start-ups are more often developed in a planned way based on hard data, rather than their founders’ enthusiasm.
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