It’s painful watching a good business venture closing down after only a year in operation. Research has shown that over 90% of all startups fail.
There are various reasons why startups fail. The following are shared across all startups regardless of all industries:
Entrepreneurs may know their product, but many fail to under the mechanics of a business. Few entrepreneurs make the effort to develop their business acumen. A deficiency that leaves them unable to adapt to sudden political, social, environmental and legal damages that affect their business.
- Lack of experience
Although they have winning product, many first time CEOs lack the experience in the industry they are entering. This lack of experience translates into poor supply chain management, hiring of inadequate staff and poor economic decisions.
- Personal problems foundation of startup
Some entrepreneurs enter business due to pressures in their personal lives. Instead of being driven by passion, they are driven by pressure. Pressure stemming from expanding families and unrealistic social expectations.
People don’t intentionally work only to have their hard work be closed down after twelve months of operation. In the same way failing startups are similar, the successful 10% also share character marks that have made them immune to failure.
Listed below are some characteristics that can indicate a startup that may last in the long run.
- The product matters
Many startups fail because the product or service is not wanted or needed in the market. Market research is crucial to developing a product that fills a needs gap. Products cannot be contingent on the likes of the entrepreneurs, but on the likes of the customer.
- Nothing goes unnoticed
The staff of successful startups know that different parts make a whole. And like a well-oiled machine, one part needs the other to function at 100%. In business a startup cannot afford to be segmented. Marketing needs to know what Finance is doing; Finance needs to know the running’s of HR. This will allow issues to be spotted before they cause harm to the entire organization.
- Geared for growth
Entrepreneurs should think long term: what happens once they successfully enter the market? Growth should always be kept in mind when making major decisions as growth attracts investors. Startups should not settle for slow growth as that will soon mean no growth. A company that is not growing is failing.
By Ros Limbo (Freelance Writer)