At a glance, starting a new business might look like an easy thing, but new businesses are critical and they may fail very quickly. In fact, statistics show that 50 percent of startups fail in their first year and 95 percent in the first 5 years. People that succeed is because they are able to apply the right business principles.
Here, we look at why startups fail and how to succeed.
Starting a new business for the wrong reasons
Do I want to start a business to make a lot of money? Or I want to have your business to be your own boss? These are some of the questions that come in mind when starting a business. While these are benefits successful business people achieve after years of hard work, they are not enough reasons to start a business.
Start a business because it’s a passion and you love it. This means that the product you choose will fulfill a need in the marketplace. Also, ensure you have the drive, patience, determination and a positive attitude. Don’t give up.
Poor business strategy
Failure of a startup can be associated with the poor structure of a business model. If I am a business owner and fail to do my homework well to understand the value of a customer or the cost per acquisition, then I have no idea what I will be getting into, and the result is a failure.
Although a new business can master the basics, you should always include room for strategic error. Always stay diversified and challenge what’s working.
Creating something people don’t want
The reason why most startups fail in their first year is that they decide to create a product or service that no one wants. They never conduct any market research, just building something without putting it into the actual test.
To keep off failure from the start, the best thing is to apply some lean startup methods to test the product before its launch. This will help a business owner determine if it really suits the needs of the people.
Poor planning
Anyone who owns a business knows that a strategic plan is a key thing to the success of a startup. It is important for any business to have a business plan. Most startups fail because they lack a realistic business plan based on accurate and updated information for future success.
A good business plan should include the following:
Brief descriptions of the business (goals, vision, and mission)
Possible problems and solution
Market analysis
Financial analysis
Workforce needed
Competition analysis
Marketing and advertising strategy
Budget
Poor marketing strategy
Most business owners assume that once they start a business, it will be successful. People will start flowing in and buying their product. Unfortunately, this doesn’t happen especially if there is no effective marketing strategy in place.
To be successful in startups, create a good marketing strategy. It is important to know the target audience and inform them of your product by marketing it. Doing so will help generate leads, leading to higher sales that grow your business.
It’s not too late, you can save your startup from failing in the first year of operation. Considering these reasons will help you find out what to work on and help you succeed in a certain industry. All you need is passion, dedication, and determination to succeed.
