Sink or swim: Why do most startups fail and what can we do to avoid it?
By TRISOFT team
When we talk about startups, we can literally imagine a journey into the unknown. It takes courage and being able to cope with uncertainty and ambiguity for an entrepreneur to rise up to the challenge. Many do and statistics talk more and more about many of them failing. There are a bunch of theories out there on why most fail and few succeed. Book Stores and blogs, they are all full of stories on how to get rich, how to be the best, revealing supposed secrets of success. There’s no wonder people are in fact so clueless and confused, leading to a rate of failure in startups of more than 50% beyond five years. Some of them don’t even make it there, dying before actually being born.
Some startups fail because their products and services didn’t end up being what was thought they would. Others fail because their revenues couldn’t grow fast enough. Ultimately, a business fails because it runs out of money. But along the way, there are a multitude of reasons why this unfortunate event can happen — from marketing issues, management issues, to business models trouble, or actual business ideas that just aren’t meant to survive.
On the other hand, there are also plenty of characteristics of successful startups and today we will focus on those.
In business they say that if you don’t have a vision, then you have nothing. A clear perspective on how things should evolve is definitely important for any company, especially for a new startup trying to make the leap to a well-established business. A vision is not something you can purchase though — as a leader you either have it or you don’t, and in the long run it’s going to serve you as a compass in tough times.
2. The product is perfect for the market
Following many researches, one of the top reasons for startups failing is the fact that companies created products or services no one (or very few) wanted or needed. Investments were made, people were involved and, at the end of the line, nobody bothered to thoroughly investigate if there was a place on the market for that specific product or not. Market research serves us well before we throw ourselves head on to our business plans and ideas. So if you’re going to spend your time and money on a product, first make sure it fits well into your business environment. Otherwise, you risk losing your investments and it’ll be too little too late.
3. The timing is right
We all know that life is sometimes all about timing — if the timing is right, we can get that great job, meet that great woman/man, have that great eye-opening experience. If the timing is wrong, we might have all that we need and still won’t be able to accomplish our plans. We say it’s the same with startups. Many successful entrepreneurs have recently come forward with the belief that timing is indeed the most important thing when it comes to the success of your startup. Entrepreneurs should do their research thoroughly, be well prepared and have the willingness to adapt to new circumstances, but when it comes to timing, for the most part, it requires being attentive and following that gut feeling that usually comes with experience. Plus a little bit of luck so that everything can fall into place in due time.
4. Creating complete products, not just concepts
One flaw of the businesses who fail to make their startups successful is the fact that they create a great concept, but on little practical basis. To be more exact, the actual product is merely just a plan and the road to becoming something clients can effectively use and benefit from is too long. This is why customers lose interest and end up going to a different provider, someone who can get them what they need exactly when they need it.
5. The good entrepreneur
A good product and a brilliant idea are not a guarantee of a successful business. A very important role is played by the founding entrepreneur of the startup, who will actually become the engine and the force behind the scenes. A good business leader needs to be able to make the right calls at the right times, to put together the proper team so that his plans are turned into reality and at the same time be aware of their shortcomings and find ways to address them. A successful entrepreneur will not only work in his business, but on his business as well.
On the other hand, startup leaders need to have a special gift to inspire people and give them the right reasons to follow them through the uncertain journey ahead of them.
6. Discipline and Determination
Here are the two D’s that should never go missing from the startup equation — discipline and determination. On the one hand, discipline is a way of expressing self-control and focus, which leads to a strong work ethic, which in turn leads to getting things done properly and effectively. Determination is the other factor of major importance. When building a business it is of essence to persist in your plans and ideas and never quit, especially when the going gets tough. You need to be prepared and focused on overcoming any challenges in order to make success happen.
For startups, things always move faster than usual. The leadership, the working team, everyone has to be able to do things quickly and efficiently in order to reach their goals and milestones. Sometimes you just need to meet these criteria faster than your competitors. The products or services you are bringing to the market have to be launched on time and delays are to be avoided at all costs. This also applies for the mistakes you are bound to make — as soon as you make them, learn from them and this way get to improve yourself, you will be able to offer better services to your clients.
8. Budgeting skills
Any business has to face the difficulties of budgeting and for startups it’s even harder. The financial plan needs to be very well designed so that every step of the way is covered from this perspective. As an entrepreneur, you should know how to avoid unnecessary expenses, especially if you have a limited budget. Master this skill and you will definitely have an edge over your competition.
9. Social Skills
It is no surprise to anyone that social networking comes in handy when you’re in any type of business. Successful startups have dedicated people who handle the social connections of the company. The perks are huge when you know or you get to know powerful, influential people who can open new doors and possibilities for you.
Last but not least, when everything else is in place — you got the idea, the plan, the people, the money — execution should follow and if it’s correctly coordinated it will determine your business’ success. You will see that an experimented team will make a difference when developing a startup idea. In the end every team will get experimented in time and will learn to make more good decisions than bad ones. After all, startups are all about learning with each step and improving with each moment, aren’t they?
Sink or swim
We all know (and if you don’t, you need to!) that there is no shortcut to success, no magic formula you can apply and get the perfect startup, which would be resilient or even immune to the gloomy statistics that float around the success of startup businesses.
At TRISOFT we love startups and the challenges they bring! We dig the adrenaline and we can handle the fast, agile pace! We have dedicated our business model to making ideas happen, and for quite some time now we’ve been focusing on getting startups running successfully. Along the way, we have learned that every company’s success revolves quite a lot around taking risks. Successful startup teams are those prepared to take risks. However, your courage needs to be backed up with a strong, solid plan and a well-trained team, in order to avoid difficulties as much as possible. In our experience, we have come to figure out important aspects in the development of a startup, which has brought us success with many of our plans and ideas. So, if you want to find out more about us and how we can help you develop your startup, contact us! We’ve got you back :)!