Getting paranoid by watching your brand new venture jolting just in the nascent stage? Are the profits slackening and sales getting dwindled already? A study shows 30% of the start-ups fail at the very first year of operation, 50% start-ups collapse within the first five years, and almost 67% get out of the race within just ten years. Basically, 90% of the start-ups fail to thrive and make their business the next Big Thing.
So why do start-ups fail? And what are the odds to fit your business into that 10% category? What can you do to ensure your brand doesn’t crumble like others? Let’s find the answer below.
Here we are going to discuss the major 5 oversights that breeding entrepreneurs do and see their business sinking gradually. We have analyzed the causes, and each step where did they go wrong or how to avoid it to see an increment in the profit.
1. Solo Ownership
The idea of being a solo founder can be exciting, but in reality, the obstacles, hurdles, and eventual failure don’t really make it worth it. A company can’t run depending on an individual’s effort; rather, it grows on the basis of collaboration and teamwork.
1.1 Where do they go wrong?
Founding a company is quite challenging, and setting up it all alone in this era of competition is not a walk in the park at all! It requires hard work, and sheer dedication, along with the best minds to set up and flourish a business.
But entrepreneurs who set their sail alone in this journey, often find themselves in the lurch. Having partners and a reliable team is all that you need to see a significant difference.
1.2 How to avoid it?
- Have a co-founder to get a critic’s eye on your plans or strategies
- Make sure your partner has similar goals and objectives
- Select different people in your team who has a variety of skill-sets and perspectives
- Asses your partners on the metric of how they perform in stressful situations
2. Complexity in Business Plan
A number of young entrepreneurs complicate their business model with a stumbling presentation, unrealistic assumptions, and vague plans.
2.1 Where do they go wrong?
A promising business model is the backbone of every small or big business. You must consider this as the fundamental building block which demands utmost care and attention. A complicated and sloppy business model is always bogged down with unnecessary details.
However, such plans seem to set wrong goals, create confusions and position poor benchmarks. All these are enough to destroy a start-up at a very early phase.
2.2 How to avoid it?
- First, create a compact and clear plan with the help of professionals
- Ask for feedback from the potential investors
- Obtain constructive criticism for every strategy before finalizing anything
- Review your plans frequently along with different improvisations
3. Delaying Product Release too much
New businesses often underestimate the potential of reaching the threshold. That’s why they take a long pause before launching the product, but that’s where the company loses its edge.
3.1 Where do they go wrong?
If you wait too much before launching your product, by the time the scope of your product may fizzle out. You might have spent too much time and resources to make your product stand out, but you will get the negative outcome only, in this case. Even some businesses wait for months or years before introducing the prototype. In search of the “perfection,” these start-ups fail to get the crucial customer feedback which is really important to skyrocket your business.
3.2 How to avoid it?
- Don’t underestimate the value of the minimum viable product
- If you launch your product in the beta phase, you can easily get to the market and test your idea on the live customers
- The first version of your product can be pathetic, but as long as you provide it into the customers’ hand, you will be one step closer to your success
- Releasing the product within a stipulated time is what help you in receiving genuine feedback, and you can see the drawbacks clearly
4. Ignoring the User Feedback after Product Launch
Your start-up is going to fail for sure if you turn a blind eye to the users’ feedback. You can take this feedbacks as a gold mine for an emerging business. As much as you dig, you’ll reach the root, and your business will thrive!
4.1 Where do they go wrong?
This is one of the major reasons why start-ups fail. Once you launch the first version of your product, it’s mandatory to take user feedback seriously to build up a customer-centric approach. Be courageous enough to take negative feedback and work on those to make your product customers’ favourite.
4.2 How to avoid it?
- Take the negative feedback sportingly
- Iron out the bugs by analyzing the root of your user complaints
- Develop a customer-centric approach by listening to your users’ demand and design your product as per your customers’ requirements
- Create a product or service that’ll resolve your customer’s challenges, frustrations, and struggles
5. Hiring the Wrong Advisors
Small-scale companies often look for advisors at a cheap remuneration, which not only brings incompetent people into the business but also contributes to drowning an emerging business down the lane.
5.1 Where do they go wrong?
Each and every person who is associated with your company is the asset. Especially for the company which is yet to make a name in the market, it’s crucial for them to appoint an experienced and skilled financial advisor, or tax advisor, or business advisor. The right advisory can save your start-up from failing.
Most of the start-ups compromise in these areas and select non-skilled minds to cut down the cost. Most of the start-ups go wrong here, which finally results in a company crash with huge financial losses.
5.2 How to avoid it?
- Plan your recruitment strategy and put on a robust employee screening process
- Select a skilled professional over anything else
- Check for their background, reputation, certificates, and reviews
- Show your financial status in and out so that you get the perfect advice
These are the crucial parts where you must give special attention to grow your business from a start-up to a big brand.
It’s time to say adieu! Now you already know why start-ups fail and how you can be successful with your start-up. To learn more in this regard talk to our expert professional. Post your queries in the comment below.
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