Starting a company and trying to change the world is not an easy task. That’s why startups failure has never been a surprise in the business world. In fact, more startups have a higher chance of failing than succeeding. According to Forbes, 90% of startups fail. If you’re seriously thinking about how to sustain your startup then it is not an accident that you’ve found this article. It provides awareness for everyone involved in the small business environment. It’s from failure we learn our best lessons.
1. Raising Funds Too Early
Some business owners make the mistake of trying to raise funds at their early stage. They overestimate future revenues, minimize challenges and obstacles and focus on fundraising. After getting funded, few months down the line they find themselves unable to scale the business and meet the investors’ expectations. They end up in huge stress thinking of how to get things done. Many startups failed because of that and had to shut down. It’s particularly important for startups in their early stage to be patient when it comes to fundraising.
2. Running Out Of Cash
It can take 1, 2, 3 years even more for a business before being profitable. So it needs cash during this period to survive. Unfortunately, many startups fail due to lack of cash flow. So if you don’t want to shut down before your startup picks then find other ways to make extra income. One great way to keep money flowing is to take a part-time or temporary job until you can fully support yourself with your business.
3. Unrealistic Offers
Sometimes the competition is so high that It is difficult to get noticed, even with good products. In order to get more customers, some startups tend to offer incredible discounts. That’s not bad, but unrealistic offers can be very difficult to recover through prices. Numerous small businesses shut down because they were operating with a negative margin.
4. Not Meeting A Real Need
The single biggest reason for failure is that startups get caught up with what they want to do instead of focusing on what the market needs. They build smart solutions and then look for matching problems.
5. Trying To Grow Fast
Business owners wrongly associated rapid expansion to success. Small businesses expanding too soon can lead to a ton of problems. When companies chose quick expansion over manageable steady growth, operations get completely jeopardized. With their inability to keep up with the demands of production, many lost control over their operations.
6. Startups: Copy & Paste
The common point of most failed startups is copy-paste. They copy each other. There is no innovation. They do not take the time to understand the consumer behavior in a specific context or market, then adapt and innovate. They just opt to copy and paste other products. No real innovations.
7. Give Up = Failure
Failure is not an option. At some point, business owners will face tough times. The challenge is to handle them and keep moving. But many startups just give up and quit. Remember, failure is not the opposite of success, actually, it’s part of it. It’s rarely one point that’s behind startup‘s failure, but a combination of factors.
At the end of the day what really matters is a sustainable business model, great execution and mostly learning from other mistakes.
Written by Famio Services Team