Creating a startup in these modern times could be very exciting and the future looks very promising. Many startups believe they’re creating the next big thing but in reality, over 90 percent of them fail to achieve their goals. The competition for venture capital, the challenges that come by the ever-changing business environment and market share are the unclean waters most entrepreneurs step into when they decide to create their startup. One of the key to be a good entrepreneur is to be very good in risk mitigation but naturally most entrepreneurs fail from the very beginning.
In order for success to be inevitable, entrepreneurs should be aware of the challenges that affect startups so they don’t make the same mistakes that others have already made. In this article, let’s look at some reasons why startups fail and how to prevent them from failing.
#1. Wrong Motives/Reasons
Many startups hit the rock before they start.This is because entrepreneurs start with the wrong motives and they do not build up enough energy to withstand every challenge in the business world.
If your motive for starting a business is to make more money, to be financially independent, to be your own boss, to take care of the family or better still to have a comfortable life, then your startup is heading for destruction.These are all shallow reasons to venture into entrepreneurship.
When your primary motive/reason for starting a business is to impact and meet the needs of a target population or potential users, the business will succeed ,make money and the profits will be inevitable.
#2. A Good Idea is not Enough
To have an Idea is easy but implementing is challenging many startups fail because of the entrepreneur’s idea. This is where most startups get stuck, many assume their ideas are what people need and they expect customers will be eager to have what they will offer. You could have a good business idea but if it can’t be profitable, measurable and lacks good business decisions your startup will fail in the future
Therefore before trying to gain customers and making profit; come up with a business model instead.Your business model should entail all cost, the right team, marketing strategies, policies and different methods of monetization. The importance of a business model is to allow entrepreneurs to better understand how they’ll run their business and how to attract and win over customers.
#3. Lack of Interest for your Products or Service In the Market.
Many startups fail because entrepreneurs miss out in the early stage of their product development.They believe their invention/product/Service is so appealing that customers will beg for it and money will begin to flow in. Most entrepreneurs don’t clearly understand their product’s aim, who they’re building the product or Service for, what problems it should solve, and what it might be able to achieve in the market.They don’t carry out proper market research to understand their target audience and they end up producing a product that no one wants.
For example a startup might invent a product that doesn’t solve a problem for an adequate population, it lacks demonstrated value to make people use or buy it and maybe the timing for its release is wrong i.e customers may just not be ready for a particular solution at that moment.
For startups to avoid changing their course or product to market fit(trying to satisfy another market),they could validate their product in pilot projects before launching,or they can carry out beta-testing to outstandingly reduce the risk of market rejection. Also,startups should come up with solutions that will be valuable for people
#4.Lack of skills and Poor Team Management
Having a weak team is one of the reasons startups fail. Most entrepreneurs are more focused on Product Instead of building the Company around the product.They think they can do it by themselves;they often lack the necessary skills and team needed for a business to take off. founders can’t run a business on their own.they will always need to have someone good at sales, someone good at management and bookkeeping, someone good at marketing and someone good at product development. Customer service, business development and legal in-house employees can come in at the second phase of the business
Having a weak management teams causes startups to vulnerable in certain areas of operation
-They are often weak on marketing strategy;creating a product that is no one wants to buy because they failed to do enough work to validate their ideas before and during development.
-They are usually poor at execution, which leads to issues with the product not getting built correctly or on time, and the go-to market execution will be poorly implemented.
- There is Poor communication.it isn’t just about language issues; it’s about the development team not setting up a clear communication flow, ignoring meetings, and not having so-called “constant fusion.” Founders are not open with their team during the whole development process. etc
If a founder or team lack the skills or abilities needed to get your company going, it is necessary to identify those needs early on.Carry on research , study, and experience/implement theoretical and practical knowledge that can give you the upper hand against competitors and prevent the company from crashing.
#5.Poor Management of Cash Flow
Cash is what keeps a business going; No cash No business, CASH IS KING. Many startups often do not have enough cash to run the business. It’s important to note that good clash flow is as a result of a business whose clash flow is properly managed. Entrepreneurs often focus on producing the perfect product/solution for a problem before launching after that. This becomes a problem when they need cash coming in at an early stage to keep the company open.
Cash flow is simulated as — cash coming in and cash going out. To make a business financially successful, the cash coming in must be more than the cash going out. If a startup has overloaded debt, low profit margin, high payroll costs, small recurrence purchases, clients delaying payments and high churn rates(acquiring customers and not keeping them);it is a clear sign the company is experiencing a cash flow problem.The founder is tempted to stretch into the company’s treasury for cash to pay suppliers, bills etc.
In order to manage your startup’s cashflow avoid running in to overloaded debts,.always try to negotiate terms with your suppliers that are longer than the payment terms you give to your customers,encourage prompt and quick payments from customers,avoid extravagant/unnecessary spending that do not add value to the company especially in the 1st phase of your company and manage bills. Before spending cash on renting a classic office ,travelling for conferences/summits/exhibitions, ask yourself some real questions if that will bring the ROI you and your team expect.
#6.Poor Marketing/Sales Strategies
No matter how great your product or service is and there is no disposition put in place for people to know about it, it will surely fail. Poorly managed marketing is another reason for the failure of many startups.You need to come up with a good marketing strategy to place your product out there for people to see.you don’t need to be or have a professional digital marketer /PR team at the beginning, but you need to make some noise in social media and in the press about your company and products. let your publicity in the magazines and websites be authentic, authoritative and popular for your audience.
when a startup cannot manage marketing properly, no one will see or know about your product not to talk of buying it. Marketing /sales looks sometimes looks like a waste of time and resources but it is the bedrock for a startup to survive.
#7.Trying to Grow too Fast
Many startups do not want to be a startup anymore. They are so much in a hurry to grow or expand especially when they start making profit..They are sometimes in a hurry to get a bigger/better office space,hire more people, to release new products, and enter new markets etc.The quest for startups to grow too fast so as to be recognized makes them to do things out of order and they later on crash.
#8.Fear of Sharing Ideas
Many Entrepreneurs are afraid to let others know about their ideas or prototype until it is ready. They are afraid of criticism or someone might steal their ideas before it is released. Getting feedback from potential customers is necessary for the success of any startup.
Do not be afraid of someone stealing your idea or that your prototype will not be good enough to be shown to the first people.There are numerous platforms where your idea/prototypes can be made ,exhibited and tested with feedback from those who tested it .This will help u to improve on your product until people begin to demand your product.
So,If you’re interested in building your own company/startup and you don’t know how to go about it, why not go through our website at www.zixtechcorpoartion.com , take a look at our Startup and Investment Ready packages and contact us.
