Some people, even CEO's describe startups as young companies that are just starting out with a new idea. Others describe it as a company that is going through financial and branding difficulties, some even describe it as a culture, while others profusely argue that it is a state of mind. Whose to know?
When starting out, there are a couple of things that a company needs plenty of, and that is collateral and good word of mouth. But not every company is so fortunate to have these things, so hard work and dedication is required that much more. Now of course, some startups might just be a bad idea, and the sooner that particular startup doesn't exist anymore the better the world will be. However, there are hundreds of startups that are excellent ideas, but for some reason they are just never able to take off. So there you have an excellent idea, gone down the drain because of lack of finances, disorganization etc.
How Often Do Startups Fail
Statistics show that 90% of all startups end up going out of business. Many of them within the first year of launching. Startup Statistics Studies show there was simply no market for their product. Or they greatly underestimated the small market that they did have, in terms of it growing. Without a firm and growing market, the startup will have to increase their advertising and at the same time keep up with the huge influx of operating expenses. This could become quite costly. And all the while, the business owner still has his/her own personal bills to pay.
The percentage of startups that closed their doors within the second year of opening in 2015 was 80 percent. In 2016, 70 percent failed and in 2018, 56 percent failed. Different reasons why a startup may fail are:
a. Choose the incorrect people to work with
b. Ineffective marketing strategy
c. Pricing problems
When it comes to picking out the right people to work with, this decision can make or break a business. Always be sure that the group of people that you choose to work with are serious and determined partners. Make sure that they care about the prosperity of the business as much as you do. Next, having a good marketing strategy is crucial. If your marketing does not make sense or if it's trying to grab the attention of the wrong group of people, it won't work.
To Better Than the Next Startup
To make sure that you're on top of things, set goals. Set your goals higher than the other startups, and then do whatever it takes to maintain them.
Why Many Startups Fail One very important way to stay ahead of the game when it comes to a startup is knowing the law. Familiarize yourself with state and federal laws.
Understand there are laws that every state in the union must abide by when it comes to how businesses hire, pay and treat their employees overall. What You Should Know About Being a Startup Then there are state laws which vary. Find out exactly what is the minimum wage in your state. If your company will be utilizing contractors, gain some knowledge by reading or sitting down with an employment attorney to find out how to accurately pay them. If you have businesses in other states, keep in mind that each state has a different set of laws.
When starting a business make sure your company has the proper paperwork in order to protect it and it's name. Be sure to register the name of your business with the specific state that it is in. This is important. This action blocks acts of infringement and it protects business owners from each other when it comes to one having a name that is too similar. When businesses apply for reservation of name it cuts down on confusion. When companies that do not want to take that leap when it comes to becoming incorporated, but who want to protect that particular name for themselves for the future, this is an excellent option.
By setting your goals higher than the rest gives your startup a fighting chance. But it's not just about inventory, marketing etc. You can do every right when it comes to that part of your business, but get side-swiped with a lawsuit for not learning about and following state and federal laws. So, set high goals, learn and keep your eyes open!