Why do 90% of startups fail? Do you fall under the 10%? — Roshan Shrestha
We live at a time where innovation is at its peak. Today’s technology especially facilitates the emergence of so many entrepreneurs with their own ideas for a start-up. With so many success stories of entrepreneurs who made it with hard work, you wouldn’t think that a lot of startups fail. However, those success stories only show a fraction of the reality as 90% of startups fail in their endeavor. In a lot of cases, an entrepreneur’s work ethic is not enough for a startup to succeed. There are a lot of factors at play which will affect the success and failure of a startup.
A problem a lot of startups face is that their product does not have a big enough market. They are too caught up in having this new exciting idea to really check to see if the market for their product is a sizable one. In the rush to have a product that is entirely unique and original, they lose sight of their objective and ultimately, their venture becomes more about creating a business instead of providing a product that has actual need in the market. The constant feedback from users and audience will help new entrepreneurs to understand the shortcomings of their business so they can make the changes accordingly.
In addition to that, there is also the problem of poor marketing. The ability of a business to properly advertise to its target audience will determine whether or not a business can take off. Proper funding for advertising is essential to cover a wide audience and make the product more accessible.
The denial of the existence of problems within a startup is ironically the source of a lot of problems. It’s understandable that entrepreneurs will feel protective of their business ventures and will not want to face rejection from other people. However, sometimes, this defensiveness can reach a point where the entrepreneur will completely reject any constructive criticism even when it’s beneficial to the business. This denial of the fact that there are going to be problems inevitably in the business will stop it from moving forward and it will eventually fail.
A lot of entrepreneurs, while being great creative thinkers, fail to step up to a leading role when it comes to their business. Having a proper leader who will take on the responsibility of managing a start-up and all the problems that come with it is essential for a business to stay afloat. A lack of situational awareness goes hand in hand with incompetent leadership. Someone who is not equipped to navigate the competitive landscape and any unanticipated setbacks will not be able to run a start-up sustainably. The failure to set a clear objective for the business will create numerous problems for the start-up in the future. Having a clear plan of action will ensure that the goals of the business are apparent, and will also help the workers prioritize the core values of the business.
Entrepreneurs who fail to properly manage their cash flow will inevitably face failure. Without sticking to a budget that ensures growth; smart investments; or sufficient funds for research, development, and training, a business cannot survive, let alone succeed. Satisfaction from minor growth is a big problem for most start-ups. When the growth comes to a standstill, the business runs the risk of being surpassed by its competitors. It will be rendered irrelevant by imitators. While not all businesses warrant exponential growth, it is still needed to some extent to motivate the workers and to keep the business going in slow periods.
Failure to adapt to a competitive environment will cost an entrepreneur their start-up. There are bound to be unforeseen problems in any new business. The ability of an entrepreneur to adapt to the changing situation and solve the problems will set them apart from every other person with a start-up. A good leader is defined by their ability to adapt to constant change and their ability to use it to their own advantage and growth instead of resisting it.
Obviously, you can never exactly know what problems a start-up will face. No amount of planning will let you predict the problems and situations you will be in. However, these basic tips should help you find your footing and be better equipped to deal with some of the mistakes you might be making so that you can fall under the 10% of startups who are doing things right.
Originally published at https://www.roshannrs.com on January 15, 2021.
