Successful startups have warped people’s ambitions over the past a decade. They have become the aim of the game and, in a world where people go to find the news they want to hear, the hype has become exaggerated. Yes, there have been successes, mega-successes, billion-dollar successes – Uber, Airbnb, Dropbox, Snapchat, Xiaomi, Square, Pinterest, Spotify, Lending Club etc – but for each one of these, an impossible amount of others have gone up in a rather pathetic cloud of smoke. More often than not, their very existence goes totally and utterly unnoticed.
So why does this happen to so many? What is the reason such a countless number of startups fail while others hit the big time? The truth is, there are a ton of reasons the lead to the untimely death of your idea and effort. But while so many of them are usually out of your control, there are a lot of variables that are very much within your reach and influence, and those are the ones we have highlighted for you below.
Here are the top reasons why startups fail:
The Market Need Isn’t There
The only way a startup company can succeed is if it solves a particular problem that their target audience needs solving. Consumers experience a lot of problems and issues in life and your startup needs to address at least one of these. To succeed you must find a way of fixing or improving something, otherwise, you are destined for failure.
You Don’t Have The Right Team
Getting the right team together is so important when it comes to succeeding. You can’t do everything alone, not to the standard you need it done, and that’s because no one has all the qualities needed. Not Steve Jobs, not Bill Gates, not Elon Musk. But it isn’t just about having the right IT support in place, or the right sales executives or marketers. Yes, these are all crucial things, but qualities like motivation, innovation, and sharing a common vision are all imperative to succeeding. Without them, you’re running off the cliff without even realizing.
No Money, More Problems
Money is a big problem that all startups face. A lot of the time it is because they are underfunded and fail to get themselves off the ground properly. They don’t have enough in the tank to become self-sustaining. But that isn’t the only money-danger swimming about in the waters around your startup. Having too much money has also been a problem among startups with a good idea behind them. Too much money leads to arrogance; they start spending recklessly, not understanding how important money-management is for everyone, no matter how many zeroes their backers have tossed their way.
Where Is The Business Model?
Oh, yeah, having a great idea won’t cut it. You could have found a way to turn sand into cents or water into wads of cash, and good for you, there are plenty of both out there. But without a business model, you cannot hope to succeed strategically. No. This is called gambling. It is called luck. Every startup needs to have a plan in place, a strategy for how they are going to succeed and monetize their plan from the very, very beginning.
Marketing Has To Be Mega
Too many newbie entrepreneurs get this odd arrogance complex whereby they think their idea or product is so amazing it will market itself. It won’t. Sorry to be the bearer of bad news, but it won’t. Other’s stop advertising to save money, which is like stopping the clock to save time. But this isn’t all. Advertising to the wrong audience or through the wrong channels is equally harmful to your business and one of the biggest startup killers out there. If you want to be successful then you have to know how to budget properly, budget in your marketing needs, spend the money and spend it in the right way; it doesn’t matter how genius your business is.
The Big Pricing Pitfall
A lot of startups get it absolutely spot on by developing a seriously attractive product or service, which is half of the battle. However, they fail because their seriously attractive product is also a seriously costly one. In fact, getting the pricing wrong accounts for exactly 18% of all startups that fail. Why? Well, if a product is too expensive then your business will start to massively underperform on the sales front and that is going to hit your revenue hard. You may have a nice cash reserve, but you’ll be amazed at how quickly that will get eaten up.
Life Is About Timing
Markets change, competitors up the ante or fall behind, and economics can come tumbling down faster than a clown’s trousers, which means that a lot of the timing is out of your hands. However, doing the research isn’t. The same goes for the timing of your launch. You need to know when to act swift, what is too swift, and what is too slow. Getting this wrong can be super detrimental to your startup’s success. Let’s say you raise your funds through Kickstarter, and the buzz around your idea is at fever pitch. Well, you’ll want to bottle this up before it fades and your product is forgotten. However, you don’t want to rush it so that your product is below par.
Location, Location, Location
Yeah, setting up in a bad location is as much of a killer as it has always been. Maybe even more so. Yet, despite the years of warning and chit-chat on this topic, over 10% of startups still fail because of setting up in the wrong place. You want to set up somewhere there is an audience for your business, an audience that is going to need and use your product or service. You need this to succeed. But it goes well beyond this because you should also look to set up in a place that has an abundance of talent. You are a startup. That means you are going to need to have access to top talent, people that will have a hugely positive effect on your business whether through ideas of skill, so don’t ignore that when thinking about where.