Why do so many startups fail?
Starting a business is a lot harder than most people think. Rarely is a business so in tune with its niche that it can float along with minimal effort. But why do so many startups fail? For that matter, how many of them actually do fail? The reasons run deep.
According to business owners, reasons for failure include money running out. A key job of the CEO is to understand how much cash is left and whether that will carry the company to a milestone that can lead to successful financing, or to cash flow positive.
Being in the Wrong Market
Being in the wrong market is another reason why startups fail to grow. Too many people try to start a business targeting everyone as their demographic. This doesn’t work out well. Next, they try to target everyone in their town. Again, too broad. The more narrowly defined your niche is, the easier it will be to market to the right audience.
One should have a good knowledge of what their customers want from them. Lack of research would lead to the failure of your startups. Too many would-be entrepreneurs go into the market thinking they have a great service or product to offer, but they fail to realize that nobody wants that service or product.
By doing your homework and researching your market, you will know exactly how to meet your potential customers’ needs. So one should be an expert in their industry. Too many entrepreneurs start their businesses because they need a job. They have a vague idea of what they are doing, and they think that because they’re better than their peers, they should make a living doing it. The sad truth is that without business skills and real expertise, these entrepreneurs are destined to struggle.
Often, when starting a business, a partner is needed. One of you is an expert in one area, and the other is an expert in another one. Your ideas for the company will conflict, and without a clear resolution, it starts internal strife. You work harder and your partner works less, but your partner thinks they are working harder than you. Ultimately, the business dissolves because the partnership didn’t work. By having a clear business plan that lays out the duties of each partner, you can avoid most conflicts before they even arise. For this one should not have a bad partnership. The bad partnership is the main reason why do so many startups fail.
Having Bad Marketing could also be the reason for the failure of the startups. It could be said that a business boils down to two aspects: marketing and bookkeeping. If you excel at both, it doesn’t matter what you are selling or offering because someone will buy it. The sad truth is that most entrepreneurs know their craft and little else. Instead of fumbling through your marketing campaign, hire out that aspect of your business. It costs money, but if done right, it will bring in much more than what you spent.
Hiring The Wrong People
It is one of the reasons for startups’ failure. It’s all about people. Hire the best you can. Startups that get funding early often make the mistake of hiring people too soon, before they’ve really worked out the sort of person they’re looking for. It seems that every other budding entrepreneur out there is searching for a co-founder but in all the wrong places. Just as you won’t meet your future spouse in a nightclub, you’re unlikely to meet your long-term business partner at a co-founders speed dating night.
Ways to avoid failing include setting goals, accurate research, loving the work, and not quitting, define your startup DNA, validate ideas early and test assumptions, get a mentor and build your support network, Set goals.
No matter how great of a business you have, you are going to have downtimes. There will be periods when things are dragging along and you question your decision to embark on this path. This is a time to put in extra hours, press harder, and make it work, and never quit. Love your work and You must be passionate about your business, or it will just be a job.
Approximately 11 out of 12 businesses fail. That’s a high number indicating that many things need to go right for a business to succeed. Fortunately, you can be one of the 20% that succeed in the first year. To do this, you need to follow the tips outlined above, and, most importantly, test your idea, do homework, and make sure it will work before you jump in with both feet.