Did you know that over 90% of all startups fail? If you don’t want to be part of the statistics, you need a sound business plan, excellent marketing, and agreeable partners to succeed.
Unfortunately, this is easier said than done. Navigating the pitfalls facing your startup require you to be quick with your decision making and execution.
If you’re considering launching a startup, here is a brief guide on why most of them fail and what you can do to mitigate the risks involved.
Misguided Motivation – Building a Business for the Wrong Reasons
What are your reasons for starting a business? Are you following your passion or someone else’s idea? Whatever your reasons for getting started, you have to ensure that it’s something you can commit yourself to for the long-term.
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If you start a business doing something you enjoy, it will help you persist through the rough periods in your startup phase. Working on something you enjoy will provide you with the inspiration you need to keep moving forward in the face of adversity.
Entrepreneurs that found startups based on their passions and ideas are far more likely to succeed. The reason for this being that they live and breathe the business. Trying to run a business that you’re not committed to will increase uncertainty and derail your efforts.
Lack of Due Diligence – Does Your Idea Solve a Big Enough Problem?
Before you rush out the door to secure funding for your startup, are you sure that you have a product with market demand?
Just because you think your idea will sell, doesn’t mean that it will work out that way. What if you launch and no-one cares about your product or service? What would happen to your finances if sales were too slow in the startup phase?
These are serious questions that require thorough due diligence on your part to find the answers.
Research your niche before you commit to any business plan. Use social media to research what people are talking about in your niche and see if your product or idea solves their problem.
Startups that experience wild success provide solutions to huge problems. The bigger the problem, the higher the return, ensure that your offering is something that people will, want to buy.
Inability to Source Funding
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Often cited as the most common reason for startup failure, a lack of funding is indeed one of the most challenging aspects of business for startup companies.
New companies lack assets and credit lines, so they often resort to traditional financing models that expose their assets to risk if the company fails.
Avoid signing personal surety documents and putting up your capital to secure funding for your startup.
Get access to the fund you need to start your business using alternative financing models. Small business lending marketplaces and crowdfunding are examples of low-risk financing options available to you.
Clashing Visions – Issues with the Founders
Why can’t we all get along? Issues with founders is a top reason why many startups never survive. Conflicts of interest around business duties and decisions can derail your company if all of the founders aren’t on the same page.
Some founders refuse to budge from their ideas. They refuse to pivot away from them and embrace other strategies. This scenario is a losing battle, and the chances are that you’ll end up causing a rift in the company that demotivates and disbands your team.
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Founders sometimes experience delusions of grandeur and get lost in their egos. They refuse to accept a challenging situation and move in a new direction away from what they originally intended. This kind of selfish attitude could cause irreparable harm to your company and sink your business.
Avoid Startup Pitfalls – Find a Mentor
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Improve your chances of achieving success with your startup by finding a mentor. Mentors are an essential part of building a business that works.
Mentors offer you guidance on business strategy, as well as tips to keep you mentally strong if things start to unravel around you.
You can find a mentor by attending networking sessions or searching online for mentors offering coaching programs.
Be careful in selecting your mentor. You should only take advice from people that have walked your path and experienced success.
