It’s an unfortunate truth: not every start-up succeeds. You could have the most brilliant idea, the most passionate, dedicated team of individuals…but you simply aren’t able to get that idea off the ground. Or you start strong but find yourself fizzling out after only a few months.
Why do start-ups fail? It’s important to ask yourself this question so that you can avoid making the same mistakes when planning and launching your own business. Here are six common, but completely avoidable, reasons:
Sometimes, you have an idea for a product that seems great at first…but then you quickly learn that there’s simply no demand for it. People don’t want it. People aren’t buying it. And, while some businesses manage to successfully “pivot” away from these failed products and move in a new, more profitable direction, this is extremely difficult for small start-ups to do.
Determine whether there’s interest in your product or service before you begin developing it. Do the research and learn what people are searching for online, what they’re buying – and what they aren’t. If your product doesn’t fill a needed niche, set it aside and try out a different idea.
On the other hand, you could have the world’s most useful product for sale – but nobody will buy it if they simply aren’t aware it exists. Unfortunately, customers will rarely flock to your business on their own. You have to go out and entice them to come to you, and that means a solid, extensive, marketing strategy.
No product can sell without marketing. Allocate money to both print and online advertising. Create an eye-catching, memorable brand for your product. Make your product both attractive and accessible to potential customers.
No Accountant / No Cash
Many start-up owners and founders have a poor awareness of how much money is available to them. Resource management becomes a struggle as there are so many places to allocate cash and, often, so little cash to spend. In particular, start-ups often lack the deep-pocketed investors who fund the efforts of more established companies.
Lower the risk of running out of money by hiring an accountant to manage your start-up’s finances. They can help you develop a plan which keeps your business afloat until sales pick up and profits start rolling in.
No Solid Team
Contractors, freelancers, and other independent workers are an amazing resource for start-ups, as they often cannot afford to employ a full-sized, full-time staff. However, every start-up still needs a committed core team who will be dedicating their hours to the business and are actively invested in its success.
Without such a team, the start-up quickly falls apart. Too much work ends up spread among too few workers. Don’t launch your start-up until you have at least several dedicated individuals who will work hard and not simply disappear when things get tough. The early life of any start-up will be rough, and you need a team who understands that and is willing to weather the difficult times alongside you.
No Long-Term Planning
Too many start-ups topple due to a short-term focus and lack of consideration for the future. Important questions are neglected – how will we get customers? How much money do we need to set aside for a “safety cushion”? How do we want to pace our growth so we expand without getting too big too fast and collapsing?
One of the first steps you should take is developing a well-thought-out, carefully planned business model. Answer key questions and develop solutions to problems before they arise. Just a little planning can go quite a long way.
No Work-Life Balance
Some start-ups collapse, some explode or implode…while others simply burn out. Their founders and teams overwork themselves, neglecting sleep or personal time until they have no energy left to dedicate to the business.
Creating a start-up and getting it off the ground is a daunting task which requires hard work, a flexible schedule, and a whole lot of determination. However, you’ll never get anywhere if you neglect yourself or your team. Make sure that everyone takes time for themselves, eat, hydrate, and exercise regularly, and keep their sleep cycle as consistent as possible. A healthy, happy team is a productive team!
Remember – Start-up Success Starts with YOU!
Understanding the reasons why start-ups fail is not necessarily a guarantee that yours will not do the same. However, it allows you to prepare for the future and be aware of many of the obstacles and difficulties which you may face.
If you prioritize the strategies outlined in this guide, your start-up will have a much higher chance of not only getting off the ground but succeeding and passing through the difficult early period with flying colours!
Michael Deane is one of the editors of Qeedle, a small business magazine. When not blogging (or working), he can usually be spotted on the track, doing his laps, or with his nose deep in the latest John Grisham.