The straight fact is that most startups are failing. In fact, out of all startups, a third of them tend to fail within the first three years. Fortunately, I was able to find out that for those startups that do thrive, it is indeed those that have focus.
However, it is no doubt that “to be the next big thing, you need to build the next big thing”. Most startup founders believe their ideas are innovative enough to lead to massive success. However, in reality, that is not always the case. According to a recent survey by a top statistics firm, 2020 has seen a very high percentage rate of startup failures. Let’s take a look at the failure rates thus far.
Also in the recent past, it has been a norm that every year 200,000 new businesses have sprung up all over the world, only for most of them to crash just a year later. Startups fail for many reasons but majorly because they lack professional management which includes everything you need to know not to fail.
A startup founder Jessica Herrin once said “You have to see failure as the beginning and the middle, but never entertain it as an end”. Let’s dive into reasons why many startups have failed, are failing, or are moving towards that.
NO MARKET RELEVANCE
To have an innovative idea is great, to build on that idea by making it a startup is greater but the greatest thing you can do for your idea is research the importance it will have to
the market. If nobody seeks the product or service you want to provide, your startup will fail in the blink of an eye.
As a startup owner, you build products that people will need and not a product you want or that does not have any market interest. It is also important to always carry out market research, have a scalable market model, and build a startup that will solve an existing problem that provides a great solution to the market need.
POOR BUSINESS MODEL
Non-existent businesses founder’s ideas on everything to do with their business model. A business model is about how your startup will function and achieve revenue in a sustainable way as well as the competitive advantage it has over others.
In essence, a startup would need to have first found a large target market, a problem it will solve, and a transaction between both that will make them meet and share common needs. A business model’s main principle is that in an ideal world, there is a sweet spot that would allow it to solve a problem and turn that into a successful business.
LOW-QUALITY PRODUCT
For a business to succeed, startups should build products and services that their audience will need. Also, startups should ensure that their quality of service and products are supplied at the bare minimum requirement and high supply value. This way, your startup makes some profit, which will eventually lead to fame and success.
A good quality product must-have product/market fit. It should be able to satisfy strong market demand. In achieving this, branding also comes into place. Branding helps differentiate your product from others, gives it its own identity, and helps increase the value of the product.
Nevertheless, if your product is still very poor, without a doubt, your startup will collapse right in your eyes.
POOR PRODUCT TEAM MANAGEMENT
Product teams are assets and should be managed properly. They are your very first customers. How they are managed in-house could reflect on customers outside the company.
A good management team helps build strong teams by bringing in talents who are all about the vision of the company, very strategic, build great quality products as well as being able to execute properly and avoid unnecessary errors.
NO OPEN COMMUNICATION WITH TEAMMATES
It is important to maintain your startup’s culture through open communication between you and your teammates. Also, it includes that whenever you decide as a team, it is done collectively and should not limit them to make decisions without your consent.
Additionally, it is significant to ensure that no miscommunication could lead to major mistakes in operational processes or result in long-term consequences and thus, loss of capital.
POOR MANAGEMENT & BAD FINANCIALS
Nearly 90 percent of startups fail due to bad unit economics, poor cash flow, and financial troubles. They are often faced with a short funding cash-flow in which startups will be forced to shut down because they are financially unable to carry on.
You need good, sound unit economics, financial model, and professional management to see your startup succeed. The secret behind the financials of your startup lies in the structure and discipline of the management team.
CONCLUSION
Startups are all about failures within successes. Initially, you fail because you want to create something new for the world and bring innovation to great products. However, as every innovative idea needs your continuous innovation to market, competitor marketing, and also a market response, new businesses tend to fail.
A good startup must properly weigh every possible downside that might affect your business as you develop towards your goals. This is the only way you will avoid startup failures early on even before you begin building.
Benjamin Franklin once said, “if you fail to plan, you are planning to fail”. As a startup founder, building a great quality product with a product/market fit that pays attention to customers will help you scale up your company and prepare you for success.
At Grupa, our mission is to empower you to build internet companies that will redefine the world. With the best management tool, automation process, and great product teams then you would easily avoid a great number of disasters.
Good luck and may we see great success in years to come.
