Every year, there are tens of thousands of entrepreneurs who have innovative ideas, which they use as a foundation to start a new business. Some are great, some are good, and some not so much. However, even the very best ideas can get lost in the shuffle because of a few common mistakes that many startups make. Here are the reasons why some startups fail.
1. Poor Management & Leadership
While you may not ‘need’ to have graduated from a Pepperdine University masters in business administration program, it wouldn’t hurt. In fact, it might be just what your startup needs because an online MBA would prepare you for the management and leadership skills you need to get your startup off the ground. One of the leading reasons why so many startups fail is poor management and leadership skills.
Sometimes there just isn’t a market for what you are trying to produce. It could be that you have a great idea, but it isn’t something that major portions of the population would need or even appreciate. Some of the most amazing hi tech innovations fail for this very reason. If there is no market for your product, you really can’t expect to make a huge profit. That’s the unfortunate truth.
3. Poorly Planned Business Model
Besides learning leadership skills, a masters in business administration online program will help you learn how to write and implement a well-planned business model. Not only will you need this as a sort of ‘roadmap’ to follow as you begin to build your company, but you will need this to get financing from most conventional lenders.
That business model mentioned above is one of the things you will need if you have any hopes of getting funding for startup capital. After all, you are a new company with no track record so there is nothing to really secure a loan at this time. What you ‘do’ have is a well-planned business model that will show a lender where you are now, what you hope to accomplish, how you intend to get there and in what time period so that lending you the startup capital you need makes sense. Financial backing is one of the most common reasons why so many startups fail.
5. Production Issues
Then there is the fact that you will need to produce your product or product line. Too many times entrepreneurs patent an idea, begin selling their idea to financial backers, then when it’s time to go into production there isn’t a manufacturer that can produce your products or produce them at a cost that makes sense from a business perspective. A good piece of advice here is to always check out options prior to pitching your idea to backers. Not only will this help your startup get off the ground, but it will also help you get financial backing if a lender or investor can see just how cost effective your idea would be.
These are just the five most common reasons why so many startups fail, but if you learn how to be a leader and do your legwork prior to pitching your company, you might have a much better chance of success. Sometimes, mostly actually, it’s only a matter of knowing what ‘could’ go wrong so that you can avoid those pitfalls before you encounter them.