Why do Start-ups Fail?
The title itself is an Intimidating question to a person reading this. Well, how someone with a million-dollar idea can even fail? But indeed the sad reality of being an Entrepreneur is not all the startups perform as good as the business giants did in their initial days. Not each and every revolutionary idea reaches the appropriate audience at its first go. You might seem to have a fantastic and revolutionary idea though, but it may or may not work when exposed to the real market. According to stats most startups, and by most I mean 10% of startups actually surface to the top and rises beyond.
So today in this column is going to tell you why the rest 90% of the startups fail.
Innovation is key
Most Entrepreneurs have ideas towards a wonderful project but they do face problems while implementing their ideas. Creativity is what Entrepreneurship is all about, and many of them couldn’t find a creative way to present the products according to the market needs.
Even big companies like Blackberry and Nokia succumbed to this fact. If you don’t apply creative Ideas daily, you wouldn’t stand a chance.
Be Patient, take a deep breath.
People generally after spending a sum on their startup get pretty much impatient they want to generate maximum revenue in the shortest period of the time. Well, that sounds Efficient but in an entrepreneurial journey revenue generation is a time taking process. And that when impatience strikes in and people tend to close their startups in the very first year.
Some startups earn very goods with the day they start, but most don’t be patient and eventually, you will see a gradual growth in your company which will also give you experience.
The product or project should be aimed to solve customer problems. The more you think about the problem then the customers the better your product gets.
The general problem algorithm is that the founder of the startup gets the idea he sells it to consumers, but nobody wants it. Eventually, it ends.
Entrepreneurship is not focusing to make the solution valuable, which is the key to get out of this problem.
Bad management of working capital
You rented a big office the place is renovated to make yourself feel successful. Hiring staff, coffee machines, and big printers than you need. These fancy things like high-end devices and best working environments might sound goods but its wastage of money.
A basic infrastructure with an ample amount of staff and some basic computing and technical units will keep your company going on. Every penny you save can be utilized to keep you running for more years. Plus that could also be used to add a new feature to your project. Also, you don’t need millions to start; it will cost the best team for execution.
Bad management of the Capital also involves premature scaling. It’s one of the primary reasons why the startup fails after an initial boom in the market. When you get a certainly positive response from the customer you tend to increase your product growth, which looks natural but it isn’t very good. Because you don’t know how many people will purchase your product again, you spend a specific amount to acquire that user but you don’t know that your model is repeating. You have to Identify your primary consumer what he uses your product for and how do you monetize from him.
Don’t be scared to take risks.
Experimenting up with the new ideas and taking risks is what Entrepreneurship in all about. Change of plans which involve risks can be an everyday thing you definitely should have the ability to take calculated risks as it will make your startup grow even in crucial situations.
Lack of decision-making ability also apprehends the growth of startups as you look up to other people, advisory boards for taking decisions, because you are not able to take the risk that what if your decision fails?
Well, decision making is always a sign of a successful Entrepreneur. Talking advice from other people is good but in the end, the decision should be yours.
Criticism is better than arrogance and ego.
Most startups fail because they don’t understand the perspective of the user. Your product may be perfectly efficient to deliver what you want it to deliver, but have you ever thought from the user’s perspective. User feedback and criticism are the most important factors where most of the startups lack. You need to know what your consumers expect from your product. Let the end-users be the judge of how it will perform in the market. People only tend to build the company but they don’t want to see failure and are petrified to face rejection. We seek only praise and not criticism.
You may have a billion-dollar idea but don’t be arrogant. If users don’t like it and want to change it a little bit. Remember here your ego will let down your startup. Start digging what your users and consumers want.
Stability of Startup
If you have worked in a startup or are about to participate in one, you are going to get lots and lots of up-downs. The journey of a startup is the same as riding on the roughest terrain ever. You are never gonna get a stable start-up ever. In its initial days, you will have to work day and night to keep it growing. Most people, treat startup like normal 9 to 5 jobs, it’s the opposite.
In your startup you will not have any fixed monthly income; sometimes you will even face heavy losses. Most people quite during this time but it’s the real struggle involved behind the company.
Here is where the idea of the perfect team comes up, look startup is a team effort, not a one-man army job. You can’t think of a single founder working around for everything. Most startups work with the concept of a triangular team that involves a hacker, hustler, and a hipster (Quoted by Paul Graham founder of Y Combinator). This means a designer, an Engineer, and a Marketer will be Ideal for a team effort. We have seen some famous Individual startups too, but they take 2x more time than teams. Teams also have a better success rate than individual startups.
Difference between long and short term goals
So here comes a bit relative topic for a startup, everybody set up the milestones required by the company. So to be a successful startup you need to have both long and short term goals set up. Short term goals here refer to the number of consumers the product needs to gain in a particular amount of time, the features to be added, staff management, efficient working, product performance, feedback implementation, etc. are examples of short term goals some companies only focus upon short term goals. Whereas Management of Capital, Investments, Where the product is going, Scaling, Expansion of services, R&D, etc. are some of the long term goals.
The company should not only work on either of them but both at the same time. Looking only at Short term goals will make your work discrete and you will waste time in managing these things, growth will be slow and many times obstructed. While those who focus on only the long term goals will end up just making plans, implementation will be tough, and also the execution will lack the ability to perform in the market. So it becomes quite evident to focus upon both the type of goals.
With this column here, it takes one bigger factor and that is the person reading this. Go out with confidence and radiate the world with your marvelous idea.
Until next time,
Sayonara!
