{"id":258,"date":"2015-07-29T06:17:44","date_gmt":"2015-07-29T06:17:44","guid":{"rendered":"https:\/\/indiabizforsale.wordpress.com\/?p=258"},"modified":"2022-04-09T10:29:15","modified_gmt":"2022-04-09T10:29:15","slug":"reasons-why-entrepreneurs-do-not-sell-their-inactive-startups","status":"publish","type":"post","link":"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/","title":{"rendered":"Why Entrepreneurs Do Not Sell Their Inactive Startups? 7 Reasons"},"content":{"rendered":"<div style=\"text-align: justify;\">\n<p style=\"text-align: justify;\">Entrepreneurship was something people were averse to pursue some 20 years back in India. But now the scenario has completely changed and it has become the order of the day. After completing graduation, some students prefer to work on their own startups to lucrative corporate jobs. At the same time, a section of people working in MNCs are also starting their own ventures, leaving high paid corporate jobs. But not all of them ace the test of entrepreneurship.<\/p>\n<p style=\"text-align: justify;\">Statistics say that in India 80% of the startups do not succeed and they become inactive over time. These startups could be at different stages, with some of them hardly completed 1 year and some with 3-4 years running. Some entrepreneurs usually want to sell off their startup and others do not do anything about it. But the products\/services they have developed might be of use to some other startup\/ company (these may even include website, mobile app, customer database etc.). Even if they are sure of getting some return on their investment, many entrepreneurs do not sell their startups (that are almost at the verge of failure) due to several reasons.<\/p>\n<\/div>\n<p style=\"text-align: justify;\"><!--more--><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/#Why_Entrepreneurs_Do_Not_Sell_Their_Inactive_Startup_Top_7_Reasons\" >Why Entrepreneurs Do Not Sell Their Inactive Startup? Top 7 Reasons<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/#1_Young_Entrepreneurs_do_not_give_up_easily\" >1. Young Entrepreneurs do not give up easily<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/#2_Exit_is_like_an_Insult\" >2. Exit is like an Insult<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/#3_Loss_of_Business\" >3. Loss of Business<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/#4_Legal_Tax_issues\" >4. Legal &amp; Tax issues<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/#5_Unwilling_to_spend_on_Commission_Charges\" >5. Unwilling to spend on Commission Charges&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/#6_Time_Effort_required_to_Sell_Startup\" >6. Time &amp; Effort required to Sell Startup<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/#7_Struck_at_Valuation\" >7. Struck at Valuation&nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.indiabizforsale.com\/blog\/reasons-why-entrepreneurs-do-not-sell-their-inactive-startups\/#About_the_Author\" >About the Author:<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Why_Entrepreneurs_Do_Not_Sell_Their_Inactive_Startup_Top_7_Reasons\"><\/span>Why Entrepreneurs Do Not Sell Their Inactive Startup? Top 7 Reasons<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-3995\" src=\"https:\/\/indiabizforsale.com\/blog\/wp-content\/uploads\/2015\/07\/top-reason-for-why-entrepreneurs-not-selling-their-inactive-startups-in-india.png\" alt=\"top reason for why entrepreneurs not selling their inactive Startups in india\" width=\"1000\" height=\"800\" srcset=\"https:\/\/www.indiabizforsale.com\/blog\/wp-content\/uploads\/2015\/07\/top-reason-for-why-entrepreneurs-not-selling-their-inactive-startups-in-india.png 1000w, https:\/\/www.indiabizforsale.com\/blog\/wp-content\/uploads\/2015\/07\/top-reason-for-why-entrepreneurs-not-selling-their-inactive-startups-in-india-300x240.png 300w, https:\/\/www.indiabizforsale.com\/blog\/wp-content\/uploads\/2015\/07\/top-reason-for-why-entrepreneurs-not-selling-their-inactive-startups-in-india-768x614.png 768w, https:\/\/www.indiabizforsale.com\/blog\/wp-content\/uploads\/2015\/07\/top-reason-for-why-entrepreneurs-not-selling-their-inactive-startups-in-india-830x664.png 830w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/p>\n<div style=\"text-align: justify;\">\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"1_Young_Entrepreneurs_do_not_give_up_easily\"><\/span><strong>1. Young Entrepreneurs do not give up easily<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">Many startups are usually founded by young entrepreneurs. When they see that their startup is not working even after serious efforts, they do not give up easily due to their never give up attitude. They also have an emotional attachment to the startup. &nbsp;But due to family pressures or other reasons, they join in a corporate job leaving the startup inactive. At this stage even if some company\/investor approaches them, they do not sell it. Rather, they prefer to rework on their startup at a later point of time. Also, when they see high valuations of some successful startups, they think that their startups also have such potential to reach in the future and feel that they are losing out on that income.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"2_Exit_is_like_an_Insult\"><\/span><strong>2. Exit is like an Insult<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">Unlike acquisition which many a times is a successful Exit; exit due to failure of a startup is not a good thing to digest for many. Some Entrepreneurs take the failure of startup too seriously and blame themselves, which may not be the case always as there may be several external factors too. So they prefer not to sell the failed startup just to make sure the news of the failure doesn\u2019t become public. &nbsp;At times, the ego factor also makes them not to reveal about the startup.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"3_Loss_of_Business\"><\/span><strong>3. Loss of Business<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">When the startup is already facing problems with limited sales and less clientele, the news of exit can lead to loss of customers to competitors making the situation even worse. So entrepreneurs do not discuss about their exit and keep it as a secret.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"4_Legal_Tax_issues\"><\/span><strong>4. Legal &amp; Tax issues<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">Legal framework &amp; Tax payment structure are very complex in our country and some entrepreneurs do not know about the rules and taxes that apply to SMEs\/ Startups. In the process of selling the startup, when they go for due-diligence, there is a need to comply with legal &amp; tax structure that may invite some trouble. So they drop of idea of selling startup itself.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"5_Unwilling_to_spend_on_Commission_Charges\"><\/span><strong>5. Unwilling to spend on Commission Charges&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">Failed\/ Inactive startups are like a piece of obsolete furniture in the house. People do not like to spend extra amount to get rid off of it. If the startups are started by undergrads or people with few years of work experience, they do not like to shell out extra amount to sell off their startup as they usually do not have source of income.<\/p>\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"6_Time_Effort_required_to_Sell_Startup\"><\/span><strong>6. Time &amp; Effort required to Sell Startup<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">Selling a company in that case even a startup in India is a long and tedious process and demands some time and effort from entrepreneurs. The process of due-diligence itself requires 2-3 months. So entrepreneurs prefer to invest that valuable time in another startup rather than selling the inactive Startups.<\/p>\n<p style=\"text-align: justify;\">\n<h3 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"7_Struck_at_Valuation\"><\/span><strong>7. Struck at Valuation&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"text-align: justify;\">Unlike established companies, there are no standard procedures for Startups valuation (sometimes due to its intangible nature). The sellers usually quote very high figures and often quote \u201chigh future potential\u201d of the startup as the reason. But on the other hand buyers negotiate based on the past financials. Due to the huge mismatch in the asking price between the two, the sale process gets struck at valuation. This happens even in case of established businesses where there are standard procedures or methods like discounted cash flow to carry out business valuation. &nbsp;Many times the startups are valued at a figure that is mutually agreed by buyers and sellers.<\/p>\n<h2 style=\"text-align: justify;\"><span class=\"ez-toc-section\" id=\"About_the_Author\"><\/span><strong>About the Author<\/strong><strong>:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p style=\"text-align: justify;\"><strong>Priya Bhagat<\/strong> is <strong>co-founder<\/strong> of <strong><a href=\"https:\/\/www.indiabizforsale.com\/\">IndiaBizForSale.com<\/a><\/strong>&nbsp;that provides a \u201cPremium Discovery Platform to Buy and Sell Businesses in India\u201d where a company is seriously planning to EXIT&nbsp;from the business or looking for a&nbsp;STRATEGIC INVESTOR&nbsp;for the growth of business or looking to expand via&nbsp;ACQUISITION&nbsp;of another business.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Entrepreneurship was something people were averse to pursue some 20 years back in India. But now the scenario has completely changed and it has become the order of the day. After completing graduation, some students prefer to work on their own startups to lucrative corporate jobs. At the same time, a section of people working&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","footnotes":""},"categories":[74,69],"tags":[9,106,104],"aioseo_notices":[],"aioseo_head":"\n\t\t<!-- All in One SEO 4.9.8 - aioseo.com -->\n\t<meta name=\"description\" content=\"Entrepreneurship was something people were averse to pursue some 20 years back in India. But now the scenario has completely changed and it has become the order of the day. After completing graduation, some students prefer to work on their own startups to lucrative corporate jobs. 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