With this new 21st century business tirade, we see a mixture of great successful startups and many many more botched startups. It’s a known fact, as per the Silicon Valley (home to everything business), that 9 out of 10 startups fail. It’s the cold, hard truth, which many up and coming entrepreneurs would do well in remembering.
The question now, is not how to succeed but rather how did everyone else fail? After all, what better way to learn, than through historical postmortems? Here’s a list of the most critical mistakes that lead to even the most ingenious startups to nose dive down.
- Market Problems
CB insights, a venture capital database stated that 42% of startups fail due to lack of market need. That is, entrepreneurs and new business hopefuls run into problems of there being little to no market for the product they wish to launch. Simple indications of lack of market need include the customers not having enough compulsion to lead them to buy the product, the timing of product launch does not suit the current market or simply that the size of the proposed target market is just not as big as presumed.
- Funding Complications
Most new business hopefuls are full of confidence and optimism that their business will hit the ground running. They invest all their time, and most importantly, money into the beginning stages of the venture. Unfortunately, most startups are known to take off in the 2nd year of their release and so these new entrepreneurs quickly run out of cash and are unable to fund their projects through the rough terrain needed to reach the light at the end of the tunnel.
- Optionality Misconceptions
What this means is that entrepreneurs have a plan B and a plan C incase plan A fails. While they think this is a smart move on their part, it is most certainly their gravest mistake. Instead of converging all efforts and focus on one project, it is divided up into sections and subsections. Not only does this effect the project from the initial stages, it deviates the entirety of the project from preset goals. Now it’s simply list. Optionality usually is worse than focus on one thing.
- Unfitting Team
A strong, unified team is critical to the success of any company, even more so for a startup. The people at the core of your startup need to have varying yet distinguished roles in the business. Simply stated, one person does not have every skill to run a business. Many new startups fail to recognize this crucial notion and instead decide to go solo. Thus, their startup is on the ground rather than in the skies.