Thinking of starting up on your own? Great! Go for it! And… do your research because the business startup failure rate is as high as 90%! Know why this happens and you can give your awesome business innovation the best chance to succeed.
So, why is the failure rate so high for startups?
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Starting for the Wrong Reasons
Many people think that opening their own business will enable them to make a lot of money and have more leisure time. Not having to answer to a boss is also a strong attraction. So is calling themselves entrepreneurs.
True entrepreneurs, and those with the highest chance of success display these traits from the outset:
- Passion. You need a strong passion for your product or service you intend to offer. Study the market and believe that your product will fulfill a need and solve problems.
- Never give up at the first hurdle. Nothing beats drive, a positive attitude and a determination to make things work.
- Persistence. There will be problems, even failures, along the way. Pick yourself up, dust yourself off, and carry on. Harness your passion and determination to persist and learn from failures.
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Poor Planning
No business plan, or a poor plan, almost guarantees startup failure. Also, no plan results in no loan from a bank. A good plan incorporates:
- Strategic vision and business goals
- Web development goals
- Analysis of competitors
- Staffing requirements
- Financial analysis, including sales and expenses, forecast and cash flow projection
- Marketing and advertising strategy
- Budget and growth plan.
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Insufficient Market Research
Develop a product that meets a need in your market sector. It has to solve problems for clients.
In many cases, a product may need revisions before it strikes the right chord with the market. Without revision, your startup can fail quickly. Get feedback from potential customers to be sure you are pitching your product to the right audience.
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Weak Value Proposition
Market research should include analyzing what your competitors are doing. From this, you can develop a value proposition that outlines why your product will add more value, satisfy a need, or provide a better solution than from your competitors’ offerings.
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Poor Marketing
It’s no good having a great product and no-one knows about it. You need a strategic marketing plan that outlines what media and channels will give you the best exposure. Then you need to know how you will hit those channels for best effect. Because merely putting information out there isn’t enough.
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Ineffective Management
Identify your management strengths in terms of finance, production, purchasing, marketing, selling, hiring and managing employees. Where you lack expertise is where your startup is at highest risk of failure. Hire someone to cover it or engage a consultant to put you on the right track.
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Premature Scaling
Scaling is the stage in your startup where there is positive growth that necessitates hiring more staff, applying for more capital or upgrading facilities. It’s like changing gear in your car to keep the momentum going.
Premature scaling is when upgrades are made before they are necessary or done in the wrong sequence. This is a huge cause of startup failure! Putting the cart before the horse! Establish your product/service in the marketplace so that any scaling of resources can be covered by increased sales.
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Budget Problems
Any business startup will fail if money runs out quickly. Problems arise from insufficient planning and research. Too many enterprises are forced to shut down before they have a chance to succeed. Budget and plan thoroughly. Then get everything checked by startup specialists.
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Wrong Location
This gets overlooked frequently but it can have a huge impact on whether a start-up survives or not. When considering the location for your business, look at where your customers and competitors are. Pay attention to visibility, accessibility, and parking. Again, consult startup experts for experienced advice.
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Weak Website
A website is not just a website. A good one requires expertise, design care, functionality, mobile compatibility, flexibility responsiveness, and it should be quick to change. If your website is hard to follow or annoying to use, prospects will not convert to become clients and you will lose business to your competitors.
So, there you have it. So many reasons why startups can end quickly in failure. Get yours right and make it live. Contact an experienced web design and development agency to put your business on the fast track to success.