Why do startups fail, and how to avoid it?
No person on the Earth wouldn’t talk about luck or failure when launching a startup. Yes, some people do stupid things in building their business, indeed. But other people succeed there at the same time. Somebody whines about his fate and lack of investors, that’s why everything crumbles. Others have found quickly and easily sources of funding. So, we would like to share with you our observations on why some startups fail while other ones climb to the top, becoming big and profitable business.
Let’s talk about statistics. How many startups are failing? As hurtful as it may be to say it, 9 out of 10 startups fail. That’s a very bleak number, but it shouldn’t stop you from making your dreams come true. You should sit and calm down. Even though 90% of startups fail, you have a good chance of becoming that 10th.
Logically, you have the question: «why were we said statistics then»? We’ll try to explain. Imagine the situation, when you are embracing by some idea, you are too optimistic and already calculated profits in your mind. In this case, you need a good portion of reality. These statistics should not discourage young entrepreneurs, but motivate them to be more diligent and intelligent.
Then what is the difference between a successful startup and a failed one? You can read many articles about a step-by-step startup, visit workshops, and so on. But the fact is that too many things affect its implementation. So, we try to focus your attention on the main factors of success. Read our post on «Why does Marketing for Startups matter?» to get more detailed information on this topic.
The product has to be perfectly suited to the market.
Fortune has reported the main reason why businesses fail: It produces a product that nobody wants. A survey among startups showed that 42% of them did not find market demand for their product, and this was the main reason for their failure. A successful startup always knows what product to produce. You spend your time, money, and resources to create a product. So why not take this time to make sure the market needs your product? In other words, you should find a target audience. It is a common mistake. Beginners often suggest an unnecessary product to the audience, or can not find customers who’ll appreciate it.
The entrepreneur doesn’t lose focus on anything.
A unique idea and a strong team are not a guarantee for a successful business. Stop ignoring your business processes and the company’s problems because this is your job. Don’t let anyone be out of topic. The team lives the project and acts as a single organism. If a marketer thinks that his job is just an advertisement for a startup, and the developer is only interested in code, the chances of failure increase. You should not ignore the startup development plan, team problem solving, and involvement in what you do. Successful owners understand that they should work on the business, not in it. Many things can take you out of something essential.
The company is growing fast.
Unsuccessful startups say that fast-growing harms business. But, fast-growing is the main sign of a great idea. If growth does not happen after a particular specified time, there can be no growth at all. Businesses often go broke. Why do they run out of money? Because they didn’t develop fast enough. If your startup can grow fast, you can effectively circumvent the loss of competition, customers, and passion for development. Rapid growth at an early stage is a sure sign of future success.
You can be successful, guided by the right principles, and no matter how many startups fail. It’s impossible to foresee everything, so it’s crucial to keep the team spirit, the belief in success, and to be flexible, ready for change. A startup that has these characteristics will be successful. If you need help, you can contact us. Together we will turn ideas into results.