Why Do So Many Startups Fail?

BizGuru.me – Startups can be defined as a business that develops. Startups are generally small and are initially funded and operated by their founders or by an individual.

A start-up company offers a product or service that no other party offers or its founders believe to be offered lower. At the beginning of the stages, the expenses of start-up companies tend to go beyond revenue as their development, test and market their ideas. In this way, they really need funding.

Startups can be financed by traditional small business loans from banks or credit units, government-sponsored loans or non-profit organizations and central government funds. Friends and family can also provide loans.

It is believed that startups change today’s business and technology. Although there are interesting and inspiring stories about the success of starting, countless startups are released and evolves.

Why are startups fail? There are in fact many factors that cause that. Entrepreneurs are ordinary people try to create a business and have an impact on the technology industry. Ideas that seem promising today can no longer be profitable when presented to the public.

As much as 9 on 10 startups have failed. It’s not easy to accept, but it’s something you need to be careful. Even entrepreneurs need to plan for their failures before starting a business.

Why is that? Because the entrepreneurs who are very optimistic need to see the reality that happens at the same time and in the future. These statistics are not intended to scare you, but to encourage you to work smarter and more difficult.

Various causes of start-up failure

There are various causes for a stranded start to monitor. Here is the explanation.

Market problems

A lot of start-up companies fail is that they have a small or market for the products they build. Here are some common symptoms:

There is no good value proposal or an excellent event to make a buyer commit to buy. To obtain an order in its current state, you must find interested buyers or really need the products you offer.

Bad marketing timing. You could be at the forefront of these years, but consumers are not ready for the personalized solutions you propose at this point.

The size of the market for people in need of products and money is not big enough.

Failed business model

One of the most common causes of start-up failure is that entrepreneurs are too optimistic about the ease of customers. They assume that because they will build an attractive website, a product or service, customers will come in mass.

This can happen to the first customers, but after that, it becomes a discouraged task of attracting and winning customers. And in most cases, the customer’s acquisition price is actually greater than the value of the customer itself.

The essence of the business model

A simple way to focus on the problems of your business model consists of examining these two questions:

• Can you find a measurable way to acquire customers?
• Then, can you monetize these customers at a higher rate than the acquisition price?

The management team is not solid

A common problem that causes startups fails is a weak management team. A good management team will be smart enough to avoid the reasons above. Weak management teams make mistakes in many areas:

They are often weak in the strategy, from the construction of products that no buyer has because they do not work to validate the ideas before and during the development process.

They are generally not good at the execution stage, which can lead to problems with poorly constructed or fast products and lead to poorly implemented markets.

They will build a small team under them. There is a saying: the player of a job worker has, and the player b can only rent the player C, because the player B does not want to work for another player B. So, the company will meet with Low and bad execution.

Lack of funds

The reason a startup fails the next time the start-up companies fail are because they lack money. The key work of CEO must understand how much money is left either for business operations for financial success or for positive cash flows.

An error that occurs often and triggers the company to be missed by money is that the management fails to enter the next stage of development, before the money is exhausted. Although it is always possible to make money repeatedly, the valuation will be lower.

Incorrect acceleration of the pedal

One of the most important tasks of CEO is how to adjust the accelerator pedal. At the beginning of business, when the products were still under development and that commercial models were refined, the pedals were to be very lightly fixed to make money. It is not necessary to hire a lot of marketing and sales staff if the company is still able to complete the product to the point where the product really meets the needs of the market.

This is a very common mistake that will only result in frustration and start-up failure. But on the other hand, it was a moment when it finally became clear that the business model had been proven and the moment when the accelerator pedal was pressed even more difficult. As hard as available and existing capital sources in the company. For the first time CEO, it is not easy to know how to react when they arrive at this point.

Also Read: Implementing a Sales Funnel for a Successful Online Business

Hiring people you know, no competent people

Many start-up companies are small businesses. It is understandable if the owner chooses people with nearby family ties. And he does it by hiring people who are returned to him by close friends, parents or other family members.

For most people, the reason behind this is because they want someone to trust, someone who did not fly from the company. Unfortunately, this decision ended in error. In starting, you must hire very competent people. If they do not, they will ruin your business without flying.

Problems with the product

Another reason that start-up companies fail not to develop products that meet the needs of the market. This could be due to simple execution or a strategy problem that does not match the product with the market.

Often, the first products that startups bring to the market do not meet the needs of the market. There are several revisions for the product to adapt the market. In severe cases, the product can fail completely. When this happens, it becomes clear that the working team did not validate its ideas with customers before and during the product development process.

Less connection

Some entrepreneurs often complain about the lack of networks and connections to industry investors to support them. In addition to failing to find new people who can lead to success, they do not recognize their own network.

Startup companies need a well-connected network via existing networks, which are very easy to build.

Another great way to create online connections is to work with PR and SEO agencies. They already have relations with the media, newspapers and several high-level blogs that can talk about your start-up business.

Competition

Start a startup does not only consist of focusing on its activity. If startups want to survive in the future, they must avoid distraction, but do not forget the competition they have.

Most start-up companies today believe that their best idea will guide them to success when the product is launched to consumers. But this is not the case.

Startups are formed over time and ideas may be similar. The analysis of existing markets, competitions and companies will contribute to proposing different strategies in different areas to reach the market.

Ignore potential customers

It is always difficult for a start-up company to decide to improve a product for the better or that the market test it first. Talking to customers about product upgrade ideas can be a good thing, but it leaves the start almost zero profit.

The startup success foundation is based on market validation and if you fail with a good product, your start will fail. Probably the best way to make sure everything is fine is to measure, follow, validate and optimize the data you receive customers or customers.

Idea

The idea of ​​being the spine behind a start-up and an in-depth analysis of market needs is necessary before starting a business. Contractors must understand that starting a business, marketing and spending a lot of money may not always end with success. Diving in a business without previously analyzing the target market outlook is not a good idea.

The consumer market of today is very varied. Requests and needs are changing rapidly and today’s successful startups work with a vision without ignoring the realities of the current and future market. Future analysis is needed when implementing startup ideas.

Location

The location can be a problem on multiple fronts for start-up companies. The important thing is to adjust the concept of your startup and location. The location also plays a role in failures for remote teams. If your team runs remotely, be sure to find effective communication methods because the lack of teamwork and planning can lead to a failure.

Delete the product at an incorrect moment

If you publish a product too early, users will find it unnecessary and will retrieve them can be difficult when the first impression they have of you is already negative. And if you publish a late product, you miss a window of opportunity on the market.

Not flexible and does not take advantage of customer feedback

Ignore customers is the cause of failure. Do not collect customer feedback is a fatal error for most startups. Do not wait more than 3 months for comments from very objective perspectives.

Similarly, you do not spend enough time talking to customers and releasing features that you think you are good, but you do not collect enough customer feedback. It’s easy to get caught thinking that your stuff is good. You must pay attention to customers and adapt to their needs.

Bad marketing

Knowing the target audience and how to get their attention and turn them into a tracks and finally, customers are the most important skills of a prosperous business.

The characteristics of a successful start-up company

Now, let’s go to the characteristics of a successful startup, what are they?

Starting with a small market

When you talk about successful start-up companies, many comments about the importance of having a big market.

It is true that startups must slowly reach a big market to become a big business. But initially, it is better to start with a small market. Start with a small market, then expand this market in concentric circles.

The biggest mistake you make as a young entrepreneur is to enter a big market. This indicates that you did not find the right category. And you will treat too much competition.

Focus

Nevertheless related to the creation of a small market, another characteristic of a successful startup is the concentration. When starting a scratch business, especially with a very small team, you can easily be tempted to take too many projects, it could kill your startup.

Provides excellent user experience

By definition, Startup means a business always new. They can not rely on brand fidelity that has been built over the years as competitors can.

This is a reason why providing a useful and easy-to-use product is essential for long-term commercial success.

Positive culture

If you want to be a winner, you must adopt a positive corporate culture. Successful startups must provide a positive environment at all levels of their organization.

Communication

Bad communication can result in start-up failure. Bad communication creates a tense relationship between employees and between you and the customer. Successful startups can overcome communication barriers.

Hire the right employees and their value

The winners know how to find, choose, hire, train, motivate, reward and hold good employees. They avoid workers who do not contribute. They raise the level of employees who make the best for the team.

They also know how to make employees happy and productive. Manufacturers of renowned companies carefully monitor employees as a flock in a herd. They are nice, respectful, motivating and very favorable. This unique trait is a strong character of a contractor who deserves to win.

Objective oriented

Enter the business world requires a strategy and planning. Successful businesses are organized using a system with short-term goals that are constantly evaluated. With a system like this, businesses and business owners can identify and succeed. Strategic planning is an important part of every business design.

Persistence

The execution of a startup is not an easy question. Few people are ready for the coming trip. A successful startup can overcome many obstacles. More importantly, never lose your vision or passion.

Customer service

The value of the customer service can not be underestimated. Many successful startups can gain traction due to excellent customer service. When your customers feel valued, they will come back and become repeated customers.