Startups need a clear business plan, and the focus and will of its management to execute on the plan. Businesses, especially startups need to focus on growth and increasing revenue while managing costs. All acting in unison. Think of it as gears in motion:
In many startups, the focus is on growth (eyeballs, number of customers etc). They end up spending precious $$s and expending resources to fuel growth. This leads to high costs – marketing cost, cost of servicing clients, high cost of hiring talent etc etc. High costs and expenses don’t always translate to higher revenue.
Even if growth continues to be stable (green above), inadequate revenue coupled with high-cost is a recipe for disaster.
(reposted on Quora)