Startups don’t fail because of the risk involved but fail due to the lack of awareness of their founders.
“You have to see failure as the beginning and the middle, but never entertain it as an end.” -Jessica Herrin, founder, and CEO of Stella & Dot
If you are here, you are surely an aspiring entrepreneur with innovative ideas, grand plans, and definitely a vision. If so, congratulations on planting a new seed in this competitive world of business. Startups are just like saplings. They need time and money. Then, you have to take extra care while expecting nothing in return. Once the startup blossoms, all the patience, and hard work seem worth it.
However, like new saplings, most startups fail to grow and can die out in two to three years after launch. As per a report by Small Business Association, 30% startups fail in the first year, 50% don’t make it till five years, and 67% of companies give up within 10 years of their start.
90% of the startups fail to sustain what they thought of as the next big thing.
But you don’t want to be one of them, right?
So, the question is why do most of the startups fail? Why do the odds favor just 10% of new entrepreneurs? How to make sure your business does not crumble like the others?
This article is an answer to all your questions. We have gathered some major reasons that cause a startup to fail.
1. Good Idea, Bad implementation.
A good idea is about ten percent and implementation and hard work, and luck is 90 percent. -Guy Kawasaki
Most growing startups fail because the entrepreneurs assume an idea is enough to withstand the market. Some entrepreneurs actually believe they will come up with an idea and people will go crazy and fork over their money. This is not at all true. It is good to be optimistic but logic makes up a business.
Before starting a business, think it through! Put yourself in the shoes of your customers and think about whether you will buy it yourself. And don’t forget to plan and strategize your business. Have a proper process in place, follow a business model to keep things under control.
So, the lesson to be learned is no matter how good your idea is; it is never enough for a successful business. Back up your idea with perfect implementation if you want to establish something big.
2. Not the right team.
“Great things in business are never done by one person. They’re done by a team of people.” – Steve Jobs
Startups fail because they don’t have the right team at work. The owners want to hire the experts but fail to look for people who can complement each other. A team is built by people who work on their weaknesses and utilize their strengths. So, the solution is to look for balanced teammates. Business demands diversity. Your team must be a blend of people who are ready to work with each other and bring out the best of them.
So, the lesson here is to hire people who are up for teamwork at all costs.
3. Doing it all alone.
“If you want to go fast, go alone; if you want to go far, go together” African Proverb”
Being a solo founder sure is exciting but it accompanies many obstacles and hurdles. A strong company needs collaboration and teamwork that individuals cannot offer. Being all alone is a pretty challenging task. It demands sheer dedication, hard work, and even after doing it all right, the chances of success are very bleak. Therefore, having a business partner or a team will bring in new ideas and better management at the end of the day.
So, the lesson here is to collaborate with other entrepreneurs for better business.
4. Ignoring the burning of money.
Most businesses fail because of their exhausting investment. A successful entrepreneur understands the value of proper money management. He knows how much money is left and keeps a steady cash flow coming to the business. One of the biggest things to remember is that money is finite. And the key to success is to utilize the money judiciously. Even if you have fundings and investments, you should be wise enough to save your money.
So, the lesson here is to implement proper money management to keep the business alive.
5. Poor Marketing.
“If you build it… you may still need Google AdWords.” – Jennifer Mesenbrink
No matter how great your product or service is; if you don’t make a buzz no one will ever know about it. Poor marketing is one of the biggest reasons for startups to fail. You don’t need a professional PR just create a buzz and half of your job will be done. If you fail to manage the marketing, no one will ever know about your product, thus no one will buy it.
So, the lesson here is to spread the word in order to survive in the market.
Many businesses emerge while many disappear. If you don’t want your business to die out like a thousand others, then prevent the above-listed mistakes. As John C Maxwell has said “It’s said that a wise person learns from his mistakes. A wiser one learns from others’ mistakes. But the wisest person of all learns from others’ successes.” So, use these points to save your startup from failure.