Starting a Business — Failure Tells you More Than Success

With more and more young people interested in taking the plunge in business, many graduates have answered the call to try their luck in startups, deviating from the norm of merely taking up work or harnessing their academic clout by pursuing education overseas or entering graduate schools.

However, according to industry experts, the rate of student startups that are seen being able to make the grade has been extremely low — both in Hong Kong and on the Chinese mainland. They say the main challenge confronting budding entrepreneurs is a dearth of practical business models and a more realistic understanding of the market.

“Students usually start their business based on ideas or technology, but they know little about the market,” says Frederick Yung, a part-time MBA programme lecturer at The Chinese University of Hong Kong (CUHK) Business School in an interview with China Daily.

Citing the example of mobile-phone applications — a popular sector among student startups — he reckons that young entrepreneurs tend to focus on product design and computer technology, but lack solid knowledge of how to establish a sustainable and effective profit model.

Based on his experience in teaching “New Venture Business Project” — one of CUHK MBA’s entrepreneurship education and training courses — Yung says some students plan to profit from built-in advertisements, but attracting advertisers initially needs a large base of users, a process that they usually underestimate.

Besides being over-optimistic, students are unfamiliar with internet-related laws and regulations. He points out that the development of many apps, such as social network apps, relies on the big data collected. Hence, students need to collect as much data as possible, but they aren’t sure how much data can be gathered under the data privacy law.

Realizing the significance of offering enterprise startup education, some universities in Hong Kong have set up entrepreneurship-related courses at different levels recently. However, such lessons are a formidable task for both students and teachers.

In an interview with China Daily, Wilton Chau, Professor of Practice in Entrepreneurship and Associate Director of MBA Programmes and Chairman of Pan-Asia Venture Development Platform at CUHK Business School — a bridge between students and venture investing — believes that studying successful cases, which most entrepreneur education course have adopted, is of little use.

While successful cases can light up students’ enthusiasm in devoting themselves to startups, those who have failed to make it can offer them the most useful experience on the road to becoming entrepreneurs, Prof. Chau notes.

But the difficulty is that most people are unwilling to share the experience of why their projects failed. In addition, having teachers who lack startup experience and some teaching material coming from Western textbooks, which may not be applicable to the Asian market, are also not helping.

As an experienced investor, Prof. Chau admits that he rarely puts his money into a student startup. “The community tends to put student teams in a poor light, which means it’s difficult for them to find business partners, investors and suppliers.”

Investors, on the other hand, are also worried about students’ lack of sales channel resources.

However, Prof. Chau still believes that proper training can lift the success rate remarkably and “help students understand the reasons when they fail”

“There’re many other barriers in developing a startup, and students need to know how to conquer them one by one,” he adds… Read More (PDF)

Please also click on the image below to read the story published in China Daily.

Source: China Daily
Date published: 25 July, 2016

Photo: Parker Zheng/China Daily