“Don’t worry about failures, learn from them. Worry about the chances you miss, when you don’t even try.” Jack Canfield – Author, Motivator
Topics for Startups: Market Research, Customer Needs, No Differentiation, Leadershit, Delegating, Planning, Focus, Hiring, Partner, Finances, Failure. Launch.
A. Lessons Learned from Failed Startups
Startups Fail? Lots of People make jokes about Startups failing. The thing that I would suggest you consider is, the lessons learned from “failed” startups to understand the strategy of Entrepreneurs and where they went wrong + ruined their chance for success. No Entrepreneur believes that his/ her startup will fail. Most of the entrepreneurs have over-confidence – that they know all they need and will surely learn everything in the process of launching.
Why did it Fail? Things are different in the real world. In your mind, you will always think that your idea and way of executing the startup is the best & fool-proof, but the competitive market, dynamic Startup scenario & changing preferences of your targeted audience – make things difficult. After failing, Entrepreneurs decided to look for the reasons why they failed. They all wish they had done this much research, before launching my startup, because it would have resulted in an entirely different result. Grief over things in the past isn’t the solution, so most decided to move past of their failure and start from the beginning again. You consider these valuable lessons learned from “failed” Startups – that every entrepreneur thinking of launching a startup should be aware of.
B. Stats: why do Startups fail?
1) No Market 49%, 2) poor Marketing 23%, 3) Mgt of Cash Flow 17%, 4) didn’t Scale at proper time 13%, 5) no Biz Plan, Model 12%, 6) poor Product 8%, 7) Focus 8%, 8 Other 20%.
C. Reasons why Startups Fail and how to Reduce or Eliminate
#1. Failure to do Market Research. Launching your startup is a BiG decision. You must cover all the important factors, before the final launch. Most of the startups fail because their owners fail to do their Research completely. What’s the point of your startup, when you are only offering a product or a service that nobody wants. [No Market] This is where conducting a thorough Marketing Research comes into play. There are a lot of products on the market already. You can only succeed if you have a very “unique” Product or Service with a Unique Value Proposition. Otherwise, you must concentrate on adding your own value to the user experience, if you want to play in a fairly full startup field. Remember that today people want solutions to their problems. Focus on that.
#2. Not focused on Customer Needs – Every Startup will tell you that the customer is #1, but only a small % acts that way. Startups that fail, lose touch with their customers. Keep an eye on the needs of your customers. Find out if they still love your products. Do they want new features? What are they saying? Are you listening?
#3. No “differentiation” of your Product – It is not enough to have a great product. You also have to develop a Unique Value Proposition. Without it, you will get lost among the competition. What sets your Startup apart from the competition? What makes your Product unique? It is important that you understand what your competitors do better than you. If you fail to differentiate, you will fail to build a brand.
#4. Leadership Failure – Startups fail because of poor leadership: inability to listen to employees, working without a standard method, poor communication, lack of feedback from employees & no goal to work toward. The Founder/s must be able to make the right decisions most of the time. From $$$ mgt to employee mgt, leadership failures will trickle down to every aspect of your Startup. The most successful entrepreneurs learn, study, & get mentor/s to improve their leadership skills.
#5. Failure to Delegate Responsibilities. It is a fact that most of the Startup Founders are micro-managers. They tend to discourage anyone – even their team – trying to help them out in critical situations. They just want to keep control of everything. This urge to remain the sole authority is one of the major reasons why startups fail so early.
#6. Lack of Planning – Startups fail because of the lack of short & long-term planning. Your plan should include where your Startup will be in the next few months [Mission] to the next few years [Vision]. Do SMART goals. The right Strategy will include specific To-Do lists with dates & deadlines. “Failure to plan is like planning to fail !!!
#7. Lack of Focus, in general – Without focus, your Startup will stray off the path to the goals. It is impossible to have a broad strategy on a startup budget. What makes startups succeed is their ability to work by priority to quickly shift when needed.
#8. Hiring: A simple solution to this problem is to hire the right people for the startup. Once you have the right people in your team, start delegating responsibilities to them, giving them adequate “powers” to implement and execute the processes that will eventually lead the startup to new horizons of success.
#9. Choosing the wrong Partner. It’s no secret that it is easier to succeed in Startup with the right partners. Chose someone who has most of the skills you lack. Chose someone you can get along with real well, because you’ll be spending a lot of time with them. The wrong Partner will, at the very least “hurt”, or, at worst, “destroy” your Startup.
#10. Failure to Manage Finances adequately.
Most of the startups run out of cash too early, as they find unexpected expenses. Sometime, they have to close. This is one of the most common reasons that account for a startup’s failure. Cash Flow provides the fuel for startups, and if you are facing a financial crunch, you won’t be able to take strategic business decisions. This is why managing financial resources is the key if you want to survive & grow your startup.
How do you improve your Financial Management? Use an accounting SW like Quickbooks. Keep records of all financial records and always make decisions based on the information you get from “real” data. Know where you stand all the time. If numbers are not your thing, hire a financial professional to explain and train you to understand the basics, so you know how your Startups doing.
#11. Failure to Adapt to Change. “Change is the only constant in the world.” One of the biggest reasons why startups fail today, relates to the fact that their owners don’t want to change anything. Most just want to stick to their original ideas. With this in-flexible mindset, they fail to take advantage of the technological developments that have become an integral part of business.
#12. Inability to Learn from Failure – We all know that failure is usually bad, yet it is rare that Startups learn from failure. Realistically, Startups that fail, fail for multiple reasons. Often Founders are oblivious about their mistakes. Learning from failures is difficult, but without it, you don’t survive.
#13. Failure to Launch at the Right Time. Time is money. As a new startup owner, you must use it wisely. Many of the startups fail because the Founders don’t know what is the right time to announce the launching of their startup. This is where planning plays a vital role. Launching your startup too soon – without any research – can be disastrous. Likewise, launching your startup too late – looking for perfection – will make you miss the flight. If you take too much time to launch, your potential Customers will find alternatives, thereby robbing you of an opportunity to pitch your product to them.
Summary. In this post, I have elaborated 13 of the most oblivious reasons that account for a startup’s failure. Many startups shut down within the first 5 years, due to any one or a combination of these reasons. Therefore, Founders must focus on implementing strategies to address these reasons in a practical way to solve the problem.
Comments: Do you know of any other Reasons why Startups fail & how to fix?
from Young Upstarts & My Choice 5/19 enhanced by Peter/CXO Wiz4.biz
For more Info, click on Startups.