Advantages and Disadvantages of Startup

Startups are the new superstar as far business world is concerned because just is the case with superstar their fans are mad about them and all over them in the same way in case of startups these days many venture capitalist, institutional investors and influential investors are all over startup and running after new startups so that they can fund them. Startup is basically that business which is started on the basis of unique idea, in order to understand startup better let’s look at advantages and disadvantages of startups –

Advantages of Startup

  1. The first and foremost advantage of startup is that it is based on unique or creative idea and we all know that in this world where technology and consumer taste are changing so fast, an unique idea can do wonders because there is no limit as far as profit margins are concerned when it comes to startup as there is no benchmark against which these startups can be compared and hence they have monopoly over the pricing of product because uniqueness does not have any substitutes.
  2. Another advantage of the startup is that since these are not listed entities they have to face less regulatory constraint and also there is no fear of shareholders intervention in the company matters which in turn leads to quicker decisions and also gives the management of the company complete control as well as flexibility over the operations of the company.
  3. As far as employees are concerned they too benefit from startup because in startups they tend to learn more due to the multiplicity of tasks assigned to them and also employees ideas are heard and if employee ideas are good then they are implemented which gives employees a sense of attachment towards the company. In the case of startup employees are also given employee stock option and stake in the company and if the company turns to be successful and when the company gets listed these stake turns out to be a goldmine.

Disadvantages of Startup

  1. The biggest disadvantage of the startup is the presence of inherent risk associated with startups because the idea may be unique but consumers may not accept the product or service leading to failure of startup and consequently huge loss for the owner as well as those people who have invested their money into the company.
  2. Lack of experience of the owner is another major limitation of startup because in the majority of startups the entrepreneur is young having no previous experience and sometimes this can lead to a problem as every problem of business cannot be solved by zeal and energy some problems require maturity and patience which can be gained only from experience.
  3. As far as employees are concerned joining startup is very tricky because if startup succeeds then their career will reach new heights both professionally and economically but if startup fails which happens to majority of startups then it will be hard for employees to take a fresh start and that is the reason why employees in startups are always insecure and fearful of losing job which in turn hampers their productivity as well as efficiency in doing their job. Also in case of startups employees are given less salary and instead of salary they are given stake in company and if company fails then that stake has no value so employees are hit from two sides at one side they are given less salary and on the other side their stake which they were thinking will compensate for low salary is also of no value.

As one can see from the above that startup has many advantages as well as disadvantages but one thing is certain that they will never stop because if there is no startup then there will be no next big company as the foundation of successful big companies are laid on the pillars of startups.

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