9 out of 10 startups do not make it to the commercialization stage, according to Forbes. Not only the funds from the investors go down the drain, but also the entrepreneurs` will and determination is left in shambles. The number of startup failures sure might be in an abundance; however, the reason of their failures are not.
That is why, in accordance to what the startup gurus have to say, we have decided to list down the most common, yet the most insidious causes that can lead to startup failures.
1) Working on the wrong idea
It is fundamental for the owner of the startup to comprehend whether the idea is viable or not. This can be achieved through proper market audit and a thorough analysis of most of the aspects, if not all, that have the ability to affect the functions of the business.
The plan should be to follow an evidence-based idea that leads to potential returns, rather than nurturing a whimsical idea that leads to severe losses.
2) Failing to plan
Planning, if not the most important, is one of the few most vital undertakings that a startup needs to carry out before proceeding to the commercialization stage of the business. As the maxim goes,
“If you fail to plan; you plan to fail.”
Generally, one does not get to see a sportsman vying for the top place in any competition without months of hard work, nor any building getting completed without its blueprint; the same is the case with startups.
If you fail to set the objectives, both long-term and short-term, the goals to achieve those objectives and the procedures to realize the objectives set, the startup is sure to hit rock-bottom.
3) Failure to segment the market into prospective customers
Gone are the days when a single piece of equipment, software or any other commodity could serve a universal purpose. Even when the startup idea is huge, the entrepreneur needs to understand that it simply cannot address the needs of every single customer in the world.
In order to avoid over-generalizing the market segments, it is cardinal to set a proper marketing strategy that divides the homogenous market for your particular goods from the heterogeneous market and plans an appropriate marketing mix for your product/service accordingly.
4) Not having a strong and impactful business name
According to the pundits of startups, a business name/brand name sells the offerings for any business in the world. A customer who is unable to position the product of any company discretely in his mind is highly unlikely to engage in the buying process and vice versa.
Business names are potential tools that feed and maintain the offerings of any business entity in the minds of the customers; if the business name fails to do so, the chances of its success are diminutive.
Therefore, it is imperative that the owner of the startup hunts for it and chooses the best business names from name generating tools, as they give the aptest names Vis-à-vis the aspects of the business and its offerings.
5) Not launching the business at the appropriate time
It is imperative for the entrepreneurs to understand that even the most glorious ideas tend to fail if they aren’t pitched at the right moment and at the right place. This manifestation is evident explicitly when the product or service is related to technology. Even if the offerings aren’t related to technology, inability to grasp an existent opportunity and waiting for a better opportunity present itself in the near future is likely to backfire because off course, technology is ever-changing.
6) Lack of consultancy
Having a viable business model doesn’t actually mean that it is destined to work. A plethora of startups fails just because they do not get the proper advice from entrepreneurs that have established their own successful businesses and those already working in the industry.
7) Focusing too much on funding
Indeed, a certain amount of money is required to fund the business development and marketing phase; nonetheless, investments flowing from every direction actually undermine the feasibility of the startup rather than upholding it.
Investments come at the price, usually a share in the business ownership. Too much ownership in the hands of others can cause hindrances in achieving the plans that the entrepreneur had truly planned, leading to potential conflicts and unsustainability.
8) Not focusing on staffing
A startup can only rise to success, if every individual at the incubation stage, isn`t only capable of adding value to the business operations but also thinks of the business as his/her own brainchild and is willing to put extra effort to transmute a mere idea into a huge success.
Not many owners focus on choosing the right employees for their organization; thus, the entrepreneurship fails to survive even for a couple of months.
9) Not delegating authority
An organic organization, just like a startup, cannot flourish if every member of the team is not responsible for a task and has the authority to make decisions. For a nascent business, it is irrefutable that every employee of the organization needs to have a stake in the functioning of the startup, otherwise, its collapse is inevitable.
10) Fear of failure
Incontrovertibly, the sole purpose to pursue a business should be to turn an idea into a huge success; however, the entrepreneur should keep in mind that if the business doesn’t flourish, it is not the end of the world.
Failure is the key to success. This has been evident from the lives of many great entrepreneurs. Elon Musk, Steve Jobs, Jeff Bezos, Fred Smith, Colonel Sanders and many others, have undergone numerous failures; however, that did not hold them back. Even in the face of difficulties, they managed to capitalize on the half-opportunities presented to them, which has only been because of their attitude towards failures.
More often than not, it is observed that those entrepreneurs that manage to avoid the aforementioned mistakes, tend to be successful in their lives and even transmute their startups into billion-dollar businesses.
Agree with the common mistakes that we have jotted down? Or do you think that we missed a crucial point?
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