Why 70% of Startups fail, and how to build a successful one?
- Yves Jinishian
No one likes to think about failure, but the truth is that it's a very real possibility for startup businesses. Statistics show that nearly 40% of startups fail within the first year. This number increases to 60% by year three, and by year five, the percentage of failed startups jumps to 70%.
So why do so many startups fail?
There are several reasons, but some of the most common include poor planning, insufficient funding, and unrealistic expectations. If you're thinking of starting a business, it's important to be aware of the risks and to plan accordingly. With a solid foundation and a realistic outlook, you can increase your chances of success and give your startup the best possible chance of thriving.
In this article we will explore 4 major reasons why startups fail:
1. 42% of startups fail because there’s no market for their product or service
Unfortunately, many startups fail because there is no market for their product or service. This is often due to a lack of market research on the part of the founders. They may have a great product or service, but if no one wants or needs it, the startup will not be successful.
To avoid this fate, it is important to do your market research before starting your business. Find out if there is a need for your product or service and if there are people who are willing to pay for it. Only then should you move forward with starting your company.
2. 14% of startups fail because they ignore their customers
This is a huge mistake, as customers are the lifeblood of any business. Without them, you have no revenue and no chance of success.
So why do so many startups ignore their customers? It's usually because they're too focused on other things, like raising money or building their product. But if you want your startup to succeed, you need to make your customers a priority. Here are a few ways to do that:
- Always be listening: Make sure you're constantly monitoring what your customers are saying about your product or service. This can be done through social media, surveys, or customer service interactions.
- Take feedback seriously: Don't just listen to your customers, actually act on their feedback, and provide them with excellent customer support from the start as this will build a great user experience with your company.
3. 23 % of startups fail because they don’t have the right team
Building a great team is one of the most important things you can do when starting a company. But it's not always easy to find the right people. In fact, research shows that 23% of startups fail because they don't have the right team.
1. Hire for culture fit. This is one of the most important things you can do. Make sure your team members share the same values and vision for the company.
2. Hire for skill. It's important to find people with the skills and experience you need to make your company successful.
3. Hire for diversity. diversity can help you avoid groupthink and bring different perspectives to your team.
4. Hire for loyalty, Loyal employees create customer referrals by encouraging friends and family members to purchase your product or service, they can be great brand ambassadors.
A lot of people believe that having a successful startup is all about having a great idea. But the truth is, having the right team is just as important as having a great idea. If you don't have the right team in place, your startup is likely to fail.
4. 29% of startups run out of cash in their first year of running a business
We all know that starting a business is risky. But did you know that 29% of startups run out of cash in their first year of running a business? That's according to a new study by the National Bureau of Economic Research.
The study also found that startups are more likely to fail if they're founded by people who are older, have less education, and have less experience in running a business. So if you're thinking of starting a business, it's important to be aware of the risks involved.
To avoid falling into this follow these 2 steps:
1st be sure to carefully track your expenses and always know how much money you have coming in and going out.
2nd try to raise money from multiple sources and don't put all your eggs in one basket.
3rd keep your burn rate low and don't spend more money than you have coming in. And finally, always have a plan for how you'll generate revenue.
If you can follow these tips, you'll be in a much better position to avoid running out of cash and failing as a business.
Now we have a good idea about why startups fail, How do we build a Startup that will bring success?
1. Find a problem that needs solving.
Before you can create a successful startup, you need to find a problem that needs solving. This may seem like an obvious task, but it's actually harder than it sounds. There are countless problems in the world, but not all of them are worth solving. To find a problem that's worth solving, you need to look for one that is both important and solvable.
Once you've found a problem that needs solving, you can start working on a solution. This is where the real work of creating a successful startup begins. But if you can find a problem that needs solving and create a solution that solves it, you'll be well on your way to startup success.
2. Build a great team – invest in the right people from the outset
No question that having a great team is essential to the success of any startup. But what exactly does that mean? How do you build a great team, and how do you know if you're investing in the right people?
The answer is that there is no one-size-fits-all answer. Every startup is different, and so the team that works best for one startup might not be the right fit for another. But there are some general principles you can keep in mind as you build your team.
It's important to invest in the right people from the outset. That means hiring people who have the skills and abilities you need to make your startup a success. It's also important to hire people who share your vision for the company and who are passionate about your product or service.
3. Create a compelling value proposition – what makes your Startup unique?
Creating a successful startup is no easy feat. There are many factors to consider and equally as many ways to fail. But if you want to give your startup the best chance at success, you need to create a compelling value proposition.
Your value proposition is what makes your startup unique. It's what sets you apart from the competition and gets people excited about what you're doing. Without a compelling value proposition, your startup will have a hard time attracting customers, investors, and employees.
So how do you create a compelling value proposition? First, you need to identify your target market and understand its needs. Once you know what your target market wants, you can create a value proposition that meets their needs and resonates with them.
Keep in mind that your value proposition needs to be more than just a slogan or a catchy tagline
As Simon Sinek a leadership expert and author of the classic “Start With Why,” the Golden Circle theory says “People don't buy what you do; they buy why you do it and what you do simply proves what you believe. In fact, people will do the things that prove what they believe.”
4. Focus on your customers – they are the key to your success
Building a successful startup is all about focus. And the key to success is understanding and meeting the needs of your target customers.
To do that, you need to have a clear understanding of who your target customer is and what their needs are. Only then can you create a product or service that meets their needs and solves their problems.
Once you have a clear understanding of your target customer, you need to focus all your efforts on meeting their needs. This means constantly asking for feedback and making changes to your product or service to ensure that it is the best it can be for your target customer.
5. Get the right advice and mentorship – experienced advisors can help you navigate the challenges of starting a business
Mentorship and advice are two of the most important things you need when starting a business. And while there are several resources available to entrepreneurs, it’s important to get the right advice and mentorship from experienced advisors.
Experienced advisors can help you navigate the challenges of starting a business, from market research and business planning to raising capital and scaling your operations. They can also provide valuable insights into the latest industry trends and help you build a network of contacts.
So if you’re looking for advice on starting a business, be sure to get the right advice and mentorship from experienced advisors. It could make all the difference in your success.
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Written by Yves Jinishian
Cheers Connect – Digital Marketing Manager