Being an entrepreneur is damn hard. And it is even harder to be a successful entrepreneur. Nine out of 10 startups fail, as pointed out by Erin Griffith in her
Here is a list of the top five mistakes that most new entrepreneurs tend to make.
#1. Launching products that the market doesn’t need
This is the most common reason why new entrepreneurs are forced to pull the plug. CBINSIGHTS analyzed 101 post-mortem essays written by failed startup owners to find out the reasons why their companies couldn’t make it. Do you want to know what came on the top? 42% entrepreneurs believed that the number one reason to fail was not focusing on the market-need.
You might be having great products that will solve bigger problems. But, customers won’t buy your products unless these products meet their needs. Startups fail when they don’t solve a market problem.
You should not develop solutions, and then look for problems. Instead, you should understand the problems in your market and offer the right solutions. If you do so, nothing will come in your way to securing success.
#2. Running out of cash
Needless to say, money is finite. So you need to spend it judiciously. 29% failed startup owners in CBINSIGHTS’ report cited the lack of money the main reason why they failed. Don’t you think running out of cash brings more reasons for startup failure? Each business, small or big, needs money. And no matter how good your business is, you should allocate more money than you will actually need as there are lots of shifting variables.
Eric van Merkensteijn, a Wharton professor of entrepreneurship who left academia to realize his entrepreneurial theories by opening a restaurant from 1999 to 2004, said to SmartMoney, “Take what you believe will be your upfront investment cost, then double that number, then double it again, only then will you have a number that’s somewhat realistic.”
You must have got an idea about how much budget you should allocate for your venture. The biggest financial mistake most failed startup owners made was either they had spent too much money or they had spent less money on their ventures. Both the situations are not good. Allocate a right budget for your startup if you want to be successful in the long run.
As rightly said by David Roth on Forbes, “As leaders, it’s our job to manage the time and money needed to get to the next level without running out of either one.”
#3. Not having the right team
CBINSIGHTS found in its 101 postmortem essays that 23% startup heads believed that the lack of right teams was the main reason for their failure. Don’t you want to know what kind of team you need to secure success in today’s cut-throat competition?
We are living in the startup age. Regardless of your location, startups are mushrooming like anything. A diverse team with different skill sets is a secret weapon that ensures success. A good team is a true asset of every startup. As rightly said by Adi Gaskell in Why Your Team Is Crucial To Startup Success,
“Usually when we think of startups, we think of the driven and inspiring individuals that create the new venture. Of course, crucial though those founders undoubtedly are, the success of the startup often rests as much on the remainder of the founding team as it does on the founder themselves.”
Here are some tips to find a dream team for your startup:
- – Find the skill gap in your company
- – Identify potential candidates
- – Have a conversation with the candidates to know their visions
- – Hire candidates who can work in accordance with your objective and vision
A diverse team with different skill sets is the cornerstone of your startup success. So, you should make sure to have a right team on board.
#4. Getting outcompeted
New entrepreneurs often feel excited about their products or ideas that they forget the direct competition. Jayson Demers rightly pointed out in his article on Entrepreneur, “It’s extremely rare to have no direct competitors. Unless you’ve invented a completely new product, there will be someone who already has market share in your niche.”
No matter how innovate your idea is or how great your products are, you will have always have competitors. As competitors are not going anywhere, the best way is to tackle them.
So, what’s the best way to check competitors?
A good understanding of your niche, keeping an eye on your competitors, and aggressive marketing strategies are some important tactics to outgrow your competitors. As a new entrepreneur or a startup head, you are not sitting in the ivory tower. You are in the market and the market has other players as well.
If you want to be successful, you will have to outgrow your competitors, as simple as that.
There is a good side of competition as well. Brian McBride, U.S. Soccer Player, said once, “Competition helps people figure it out.”
#5. Not delegating unimportant tasks
When you start a new company, you want to complete all tasks yourself. This makes you super busy. Sometimes, it happens that you don’t have enough time for core business activities.
As an entrepreneur, you should focus on devising growth plans and checking on what your competitors are doing. You should assign low-value tasks, such as making travel plans, sending meeting invitation, etc. to others. This will increase your productivity.
If you don’t want to hire a full-time employee, you should go for a virtual assistant. As rightly mentioned by HubStaff, “By finding a good virtual assistant professional, a small business owner can delegate administrative tasks and effectively get-back more hours in his day.”
Gone are the days when virtual assistants used to be mere remote assistants. Now, they are skilled professionals who are adept in their respective niches. You can hire a virtual assistant for internet research, administrative tasks, data entry work, e-commerce project management, social media management, and more.
According to Ninja VA, a virtual assistant can reduce operational cost, amplify productivity, and increase flexibility. So if you want to maximize your success, you should not do tasks that are not directly related to the growth of your business. Instead, delegate those unimportant tasks to a virtual assistant.
Renée Warren said in her article on Entrepreneur, “The biggest secret of highly productive people isn’t in any way groundbreaking, but it is most often forgotten: They don’t try and do everything themselves.”
If all startups were successful, everyone would be an entrepreneur. But, this is not the reality. 90% startups fail. And if you want to be in the pool of 10%, you should learn from others’ mistakes. You don’t have time for making your own mistakes.
If you understand thoroughly the need of the market before launching any product or service, set aside the right budget, have a diverse team with different skill sets, make aggressive strategies to check your competitors, and delegate unimportant tasks, there is no reason why you wouldn’t be successful.
What about you? What is the reason of startup failure in your opinion? Share your view in the comment section. I’d love to hear about it.