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A Good Startup vs. Bad Start-Up: How to Distinguish?

Team in Empty Office

In the process of a startup creation, everyone is confident that his/her project is the best, promising at least, and it will never be left without the attention of investors or venture funds. But in practice, the team repeatedly hears refusals in financing and pieces of advice on changing or improving the business model. In order, not to find yourself in such situations, you need to learn to assess sensibly the reality and not forget that for every startup’s "plus" there will be no less of significant "minuses." We will tell you how to distinguish a good startup project from a bad one in three ways.

Method One. General Characteristics

Some performance indicators can describe the startup and confirm or deny its viability in the best way possible. So, a truly developing project, even if there is no final product, must have a clear idea, a well-developed business model, and a development plan for future. The startup based only on the founder's dreams will not survive.

Another question a clear answer on which the startup founders simply need to know is: "What problem does the final product solve?" It can happen that the project seems to be attractive in all the ways but does not carry the value to customers. Most likely, it runs the risk of being of low demand.

Method Two. Be Investor to Yourself

To determine how good the project is, you can "turn off" the team member for a while and look at the product from an outsider’s point of view, through the eyes of a strict investor. What would you focus on? For a person who wants to invest money in a startup, it is important, first of all, that the project becomes a business.

The market issue mentioned already above is also of no small importance. Ideally, a startup should be able to work and scale both in the B2B and B2C segments. In addition, of course, the investor pays attention to the idea. Having an innovation or an original approach will only add points to the overall startup rating.

Way Thee. When a Good Project Becomes Bad

Mess in Head

Sometimes the situations happen when a startup that meets all parameters and has viability unexpectedly gives up positions and shows worsened performance. How can you determine that the project has chosen the wrong course? According to Martin Zwilling, CEO of the American company Startup Professionals, there are several signs of coming problems:

  • "switching to survival mode" – the team's expectations before the launch of the project and its first results most often differ dramatically and for the worse. Consequently, the team loses motivation and switches to "survival mode." An honest conversation with the project manager and the discussion of the on-going problems can be made to help them get back on track;
  • "bad investor influence" – the investor is interested in the development of the project, he/she has certainly the expectations about the terms and amount of profit. But, if these expectations have a significant impact on the startup team, this is an alarm bell.
  • "misunderstanding of the pivot importance" – any company, under the influence of the external environment, must change in order to avoid falling into the ranks of outsiders. Denying the need for change is a direct way to nowhere;
  • "alarming conversations near the office cooler" – in any team there is a person who does not like the results. Thus, he/she will certainly try to convey his/her thoughts to others. It is impossible to allow a split in the team; it is necessary to redirect such discussions in a positive way;
  • "Lack of communication between the team and management" – the best ground for panic is the lack of information. The startup team should always know what is happening "at the top" and how decisions are taken, otherwise, do not doubt, everything will be assumed, but already without you.

As you can see, there are many pitfalls and aspects to pay attention to. However, if you are obsessed with your idea and you are ready to work hard, everything can turn out well.

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