Becoming an entrepreneur and owning startups is not easy. You have a disruptive new idea or imagination, and you are ready to open your startup business. But, many of entrepreneur get scared by the well-publicized statistic about startups failure — more than 50% of startups fail in the first four years (Source).
Starting and running a successful startup requires a lot of fate, struggles, and broad planning — as well as the capability to accommodate that plan. Becoming involved as a Technical Partner and Business Consultant to many startups over the years, we have noticed some fail, some achieve a trifle of success, and some make it significant.
Here are the few reasons why many startups fail that will help your startup to encourage and reduce the chances of your startups failure:
Startups failure is an important piece of the startup ecosystem. However, with each of the failures, we get to learn something.
No Market research
Research is the root of any huge foundation. Research is fundamental to everything — your idea, product, your cost, your location, and of course your entire startup.
Diving to the entrepreneurs’ world without proper market research is kind of jumping from the airplane without a parachute. and this would eventually cause the early end of your startup.
Majorly entrepreneurs make the mistake by not researching their market correctly beforehand. Your product or service can be unique, exciting and of qualitative but as long as there is no market need for it, you will not be able to get your audience for your product. Research and make sure that your idea is revolutionary and benefit to your customer.
Know your Competitor, recognized the requirements of your target audience and identify their needs, be patient to get the right time to introduce your product.
Business Model Failure
I guess you might be heard the name of Business Model. Business Model is primary for any startup for the success of a startup.
Business Model comprises the complete execution plan, operation process, stack holders, and projected timeline along with your target audience, and examination of the cash flow.
As an entrepreneur, lacking in the business model for your startup cause the startups failure.
Greater the business model, more easier the execution of your startup
The major reason for startups failure is miscalculated budget that leads to run out of the cash. Many entrepreneurs have admitted that they done the mistake by miscalculating the budget. There are so many things to be considered while calculating the budget for the startup result in loss of investors and indirectly customer as well. Almost 29 percent startups claimed that they failed due to capital.
Running out of your budget can be of two ways. Either you spend too much, so your savings can’t defend it anymore, or you spend too less, well, you won’t make any progress and stagnate. In this case, the golden rule of finding a good balance can be beneficial to apply. Spend sufficient to progress, but be aware of what is really necessary and what is not. It’s not easy. Managing the finances is one of the most difficult tasks of an entrepreneur.
There is well-known African proverb that “if you want to go fast, go along but if you want to go far go together.”
If you don’t get align with each other, you will get a big problem. A contradictory working atmosphere affects the overall performance, motivation, and faith of the team. Either way, it’s a quick formula for startup failure.
Choose your team wisely and diverse. They are the heart of your company. They turns your imagination into reality. An ideal team should sound together, support each other’s strengths and weaknesses, and express the core values of your company. If they lack some qualities, skills, and attributes, it can make bottleneck situation for your startup.
Another and the curious reason for the startups failure is Poor Product. It is meaningless if you are come-up with the product that is not actually required in the market or that, not something that user can enjoy by using it.
If your product is not easy to understand and use, then it is going to be the useless product ever. The reason for the poor product could be because of poor research or maybe the lower product quality.
Mostly the first product that a startup introduces to the market did not meet the market need. If you are running with the good luck, it will only need a few revisions to get the product to market fit. In the worst case, the product will be way off the scope, and a complete re-think is expected. If this appears it is a clear sign of a team that they haven’t done the work to get out and validates their concepts with customers before, and during the development phase.
To have great success as a startup, you’ll have to make sure that you are not doing the same mistakes as above.
“Present your idea to the market at the right time, to the right audience with the right price with all the product and market research to make your startup successful.”
We here at Zignuts, also have a bunch of methodologies that can help you to not be in the list of startups failure, whether it’s your first startup or fifth. We help Startups and SMEs to turn their ideas into reality.