Some projects go through failure and even bankruptcy before emerging out on top. Today we want to share a story of an entrepreneurial person, a trusted client, we have had for 4 years. He started out an ambitious idea, investor support only to lose it all in the first round. But, with FreshCodes help, he overcame the failure and succeeded in the second round. Let it be a motivational and cautionary tale on how startup businesses fail.
Why Do Small Businesses Fail? The Story Of A Startup Entrepreneur
We met our client in August 2014. The deal was to provide web development services for the founders new venture - an EdTech project. It was both an innovative and revolutionary product for education. The goal was to both facilitate the teachers’ work and make classes interactive and collaborative.
If you have a groundbreaking EdTech idea and wish to avoid pitfalls, then read our article that explains how to go from an idea to a money-making EdTech app.
Our client started out with a simple prototype with the aim to raise money. Due to the project’s modern and state-of-the-art approach, they received seed money and, wasting no more time, started the development.
The project’s CTO was an experienced internet entrepreneur. He handled technical decisions and hiring new members and decided to go for a distributed team with developers scattered across Europe. The team kicked off with three developers and one designer.
FreshCode became engaged in the development process only after the CTO had made the decision on the tech stack. The technical lead of the project, hired by the CTO, had chosen Adobe Air (AS3) for the front-end and Java for the back-end. Our app developer was tasked with back-end development.
Anyhow, the team got of to a quick start and was able to showcase the results in just a few months. However, the product managers decided to increase the functionality and increase the team, as they planned to showcase the beta version at the 2015 BETT Conference in London. Even on the eve of the event, new and untested features were added to make the project more attractive.
As you have guessed already, we weren’t working with an approved system requirements specification (SRS), which would have streamlined the development process. If you want to avoid this mistake, check out our guide on how to create an SRS for an EdTech application.
FreshCode engineers raised concerns and advised a feature freeze to make the project doable . It was clearly necessary to determine what constituted a MVP, a Beta and and version 1.0
Unfortunately, we weren't consulted . Instead, the development continued in its chaotic form - it did not even have comprehensive deliverables and a final destination mapped out.
One fine summer day day investors ceased financing the product. They had not received the promised results due to the constantly postponed deadlines and so they killed it. The team was disbanded, and the project was buried for good. It joined thousands of similar startup failures...
We believe the critical wrong technical decisions were:
We were of course frustrated with the outcome as we had gained lots of new expertises working on the project - plus we wanted it to succeed! So we contacted one of the initial founders of the EdTech project and started a new venture. This time FreshCode took care of project management and technical leading. As we had proved ourselves to be a reliable web development company, our former client agreed to our offer. We immediately started working on the new platform. The client’s role was to generate ideas and generally be the project’s mastermind and make sure that the platform was meeting the actual business needs.
The client went with a platform a lot similar to the previous one - but with a few big twists. Its key features were to be: offline mode, easy mobile devices support and customization possibilities to tailor it quickly to the future needs.
To overcome the challenges our client faced in the previous project, we implemented an Agile environment with daily team Scrum meetings for and biweekly demonstrations/discussions with the client. this way, the client could continuously track the progress and correct or improve the platform. We have covered the successful project management guidelines in a previous article. You can read it here.
In three short months, we had a fully functioning platform ready for demonstration and the client started to attract new clients. Within second month of development, the amount and complexity of features had already surpassed those of the previous project...
With a fully functioning show case, our client was confident during meetings with potential clients. He demonstrated the business values of the platform that impressed the future customers. Our client secured first sales and new investors. Almost 4 years down the road moment, we are now working on the complete customization of the platform and exploring new ways of re-imaging it for different industries. You can learn more about this project in our case study.
In conclusion, we advise you to choose your development house carefully and always seek out true experts. An adequate stack, an Agile project management methodology and a reasonable backlog of features are indispensable parts of successful entrepreneurs’ stories. Not achieving product-market-fit within budget is a big reason why startup fails as are the ability to change directions in the tech development when needed.
If you want to learn more about the reasons why small businesses fail or if you want to read real-life failure stories and how to avoid them, follow FreshCode blog. Also, sign up for our newsletter, and be the first to get our latest IT entrepreneurial advice. Contact FreshCode if you want to turn your previous failure into a success!