Thinking of starting your own business? There are thousands of entrepreneurs that have the same idea of starting a business selling a service or product. Almost all of the entrepreneurs that do manage to start their business fail within a couple of months. Sometimes they don't even last one month. This is because a lot of startup businesses fall victim to the same preventable mistakes. Mistakes that should be avoided to meet the goal of selling a service or product that consumers want.
Top 3 Reasons Why Startups Fail
There are bound to be the occasional misstep when running a business. Yet, for a startup company these mistakes can determine if the startup will thrive or if it fails. The main mistakes any startup should avoid are:
Failure to Focus on Customer Need
A product or service can only succeed if there is a demand for the product or service being sold. Nearly half of startup businesses have a product or service they wish to sell. Yet, they fail to consider if their product or service solves a problem, and is a societal need. If there is no need, for a service or product then it will not sell and the business will fail.
Running a Startup with a One Person Team
It is extremely difficult to build a startup company on your own. All startup companies run by one person fail before they have a real chance to start. Building a startup solo limits perspective. It is part of the reason a startup business fails to provide a service or product that will create customers.
Running out of Money
As a startup the most common mistake is assuming the initial funding obtained from won't be the only funding received until the startup company begins making a profit. Most run out of their initial startup money before the startup company is up and running. A very small percentage receive Venture Capital funding. More often than not startup businesses that receive this funding run out of money before making a profit. When the collection process begins the startup must begin paying back the venture capital firm for the funding provided while the startup is still struggling to make a profit resulting in failure.
For every mistake there is a solution, a preventative measure to stop the mistake from occurring in the first place.
Focusing on Consumer Need
Avoid failing your startup company by asking what does the consumer need, and not what you want to sell. By focusing on the needs of the consumer creating an answer to their problems, challenges or frustration. Keep in mind that success is higher for tested products and services. As you build your startup combine building with user feedback making your product better ensuring a higher chance of success when your product or service is released to the market (Krommenhoek, 2018).
Starting with a Startup Team
For any startup to have a chance of survival it is a good idea to start a business with at least one other person with a different skill set. Ideally a startup begins with the formation of 3 where a startup begins with the collaboration of a designer, marketer, and engineer thereby covering the basics of any startup company. When different perspectives work together providing a service or product customers want becomes 100X easier, and there's three times more consumer interest than when building a startup alone.
Make the Money Last
It is smart for any startup to assume that initial funding they receive will be the only money they have until the startup is profitable. Financially, the goal is to be smart spending as little as possible with a business plan that accounts for future profitability and sustainability before the money runs out.
There are a lot of ways a startup business can fail, yet most ways to fail can be prevented. Preventing mistakes early on can increase the chances of success in building a startup. Most startup companies fail before long, so don't be one of the many that fail. Prevent these common mistakes from the beginning to have a better chance of seeing your startup survive.