Starting a new business can be daunting…
If it’s your first venture, even figuring out where to start is riddled with complexity.
Which industry should you operate in? What product should you sell? Which customers can you target? What’s the competition like?
All of these questions can cause stress and anxiety for a new entrepreneur – especially considering the high failure rate of startups.
But while building a business from scratch is intimidating, it doesn’t have to hold you back.
You can learn from the many failures of other entrepreneurs to ensure you identify and avoid common mistakes before they happen.
Why do startups fail?
The image below shows the top reasons why startups fail:
Image Source: Statista
Unfortunately, many new startups won’t see the light at the end of the tunnel. Every startup indeed goes through a difficult phase or even a complete failure at the start before they soar high.
You can avoid making some common mistakes if you pay attention to the reasons for failure…
#1. Creating a product that nobody needs
Yes, it happens. When there is no demand for the product in the market, there is nothing you can do about it. It’s just a waste of time, money, resources, and energy.
After introducing a product into the market, all you see is people just ignoring the product and moving on with their lives.
#2. Hiring a poor team
This is especially important at the beginning of the startup. If the employees are poor, then it is more likely that you will stay in that tunnel for longer periods. Never hire poor staff to save money, even if you think you can make them into something they’re not.
#3. Lack of focus
It happens! When you are too involved in a business, it is very natural for your mind to lose focus. You may be too many things to too many people, rather than a laser-focused solution to a problem.
#4. Not having a co-founder
People often think it is okay to run a company all by themselves. The main reason is so that they don’t fight among themselves instead of worrying about the company. In reality, a co-founder can burden a lot of the stress associated with a startup.
#5. Failing to pivot
Many new businesses don’t feel like pivoting. This is because of a strong conviction. They think pivoting at a crucial juncture can harm their chances of survival. Of course, you don’t want to chop and change too often, but if a pivot is needed then it is needed.
#6. Choosing a highly competitive market
A highly competitive market looks tempting and alluring because there are a lot of other businesses already making money and a ton of potential customers. Unfortunately, this means your minimal startup funding could be crushed by bigger players.
Things you can learn from these failures
There is always something to learn from failure.
- Be patient and don’t rush into new ventures or changes to your strategy
- Sit down and analyze what went wrong
- Measure your performance honestly
- Do not repeat the same mistakes again and again
- Take feedback from customers
Okay, that is all about the reasons and learning from startup failures. Now, let’s jump onto the RED FLAGS and SOLUTIONS.
The red flags you need to be wary of
Red flags are signals of your upcoming failure. This is probably not an ideal way to stop the failure, but you still have the chance to overcome the failure at this juncture.
#1. Hiring perfectionists on your team
Really? What’s wrong with perfectionists?
The best team is not all about finding the ‘perfect’ people and staff for your company. It is about finding a balance. There is no such thing as a perfect employee, and if someone aims to be perfect they will likely never get anything done. Strive for done before perfect and hire based on values.
#2. Not having the right co-founder
Having a co-founder in itself is just not enough – you need one who shares your values, complements your skills, and is willing to commit the long hours required to get the business thriving.
#3. Too many team members with little to no customers
If your company has more staff than customers, then your company is ready to erupt like a volcano at any time. Come on, who wants more staff than customers?
If that is not a red flag, I don’t know what is.
#4. Too much dependency on paid ads
If your company thinks the only way to tap into the market is with paid ads, then you’re around the corner from failure.
#5. Pivoting at regular intervals
I told you that you should pivot, but remember, you should pivot at the right moment, not every once in a while. Come on, you are
running a company, not a car.
Making changes to your strategy
I can’t stress enough how significant it is to have the right strategy even before a startup begins.
Let’s take a look at the solutions that are needed to implement the right strategy and planning for avoiding failure.
#1. Do your research
As I discussed earlier, introducing a product that has no demand in the market is a complete disaster. Conduct proper research on the market to find out if your product has interest and opportunity.
If your product is the solution to a pain point of your potential customers, it’s more likely to be successful.
#2. Hire a team that complements the strengths and weaknesses of each other
As I said in the red flags section, you need balance in the team, not a team full of perfectionists. If you just hire people who are intellectuals, there is a high chance that you will miss out on effective collaboration.
#3. Take some time to get your focus back
Don’t spend too much time in the office. Get some fresh air or take a vacation so that your mind gets some relaxation from the daily routine. Therefore, you can focus on work even more at critical times.
If you haven’t failed yet that means you haven’t tried anything beyond your comfort zone. Try something new to achieve greatness. It is fine if you have failed in your startup attempt. Many people are experiencing failure, and you are not the only one, but try not to commit the same mistakes again.
In the end, I want to end this article with a quote.
“If you are experiencing different failures every day that means you are becoming wiser and wiser, not stupid.”