Why do Startups fail within the first year of their Existence!
On : September 17th, 2014By : Shivya Gupta
Two-thirds of startups fail within two years of their formation. Such statistics does make one wonder why businesses are started each year.Some focus on reasons relating to financial glitches or the absence of the entrepreneur’s enthusiasm. But the reality is something else. Understanding the fact that running a business is not a child’s play and neither are the reasons as to why these startups fail. We can strive to grasp some useful knowledge from the experts and prevent the biggest blunders that owe to a failing start-up and make success your best friend ! You might end up being amazed at few of the reasons on the list.
1.Market Issues
One of the biggest reasons as to why startups fail, is that they face the difficulty of being too small in size or having absolutely no market for their product or service.There is not a convincing enough worth, to ensure that the buyer will purchase the commodity.There are times when an entrepreneur introduces something at a time when the market is still not ready for it.
2. Failure of your Business Model
Entrepreneurs often are overconfident about the fact that acquiring customers is the easiest step of all. They assume that building an enthralling website, promoting their product or service in the best possible manner will open their doors to success. That may happen with the first few customers, but after that, it becomes an expensive task to attract and win customers.
3.Weak Team
An extremely common difficulty because of which startups fail is a weak management team. An efficient team is proactive in their approach in order to avoid reasons for startups to fail. Feeble management teams often commit errors in numerous areas. They are also weak on strategy, constructing a product that is not bought by anyone as the validation has not been done, nor have the ideas being justified during the stages of development.
4. Product Difficulties
Many startups fail because they fail to develop a product that meets the market need. This is either due to execution errors or it can be a huge issue on the strategic front as well, which provides failure not only in the market but also within the firm in their inability to achieve success.
5.Wrong Market Positioning and No Competition Survey
Often the case is that entrepreneurs launch their startups thinking they are the best ideas to implement but what they didn’t really do is check their competition, levels in the market and proper mapping that helps in understanding the requirements to ensure healthy business running.
6.Inflexible Entrepreneurs
If you are trying to head against the wind, no matter how fast you sprint, the harsh wind is going to take you backwards. Many entrepreneurs stay stubborn in their approach and head in the failing direction. They need to be enlightened to the fact that heading in the right direction while they still have time is the wisest thing to do to avoid their startup to fail.
However , There are ways through which one can prevent their startups to fail. Here are a few:
1. Know the Reality – Don’t let your startups fail
It is a known fact that a business does not begin to show profits until it is at least two years old. It is tough to say what your startup costs will be .One cannot be accurate about such things but having the best possible estimates can save your startup.
2. Have a Detailed Business Plan
Jotting down a detailed business plan is the most important step in the planning process of your startup. Having full review of the market , one’s competition and target market does help one understand your scope as a firm and make decisions prudently.
3. Plan the future for your Startup
Business owners can’t predict the future, but they can make wise and smart decisions depending on what they know.
4.Channel your Market Cost
Startup owners are apprehensive about their marketing , as they have already spent so much and it seems irrelevant at this stage. But you have to make the required effort to create the right association with your consumers.
5. Don’t forget your basics
One is required to understand the various aspects of business , such as accounting, finance, business law, personnel issues, and more, and how all of these impact each other and the management’s decisions.
6. Be flexible
It is not necessary that startups and their journey turn out just the way an entrepreneur envisioned it. They have to be open minded and be flexible to embrace anything that comes their way and accept the challenges in order to make sure their startup does not fail.
7. Watch your Expense
Don’t blow a hole in your bank account with unnecessary expenditures. Decoration of your work space , fancy websites and promotions often turn out to be useless and an added liability. When starting out on this new journey, cut costs to prevent your startup to fail.
8. Wise Recruitment
Take your time picking your employees. Make sure they share your vision. Take care of their needs too so that they do not get impatient and demotivated too soon.Hire ambitious team players. Getting the right people on board is crucial to your company’s success.
So take every step cautiously while running your start-up but at the same time, take the plunge to follow and live your entrepreneurial dream!!
