By Brian King
So, you’ve come up with a great idea for your new startup. But if you want to have a successful startup, it’ll take a lot more than just a great idea.
The truth is creating a startup is never easy. In fact, nine out of 10 startups fail within the first year. Starting your own company means spending endless hours working out the perfect plan, and even more hours making sure that every plan falls into place seamlessly. And let’s not forget all the years of hard work you have put in before you can finally get things off the ground.
So why do so many startups fail?
Here are seven of the most common reasons why startups fail in their first year and how you can make sure that yours will not add to these statistics.
1. Poor Management
There are way too many startup owners today that think having a great idea is enough. They think “if I could come up with such a great business idea, then surely I am more than capable of running the business myself.”
If only it were that easy.
If you are serious about running a successful business, you need to assess your shortcomings and seek appropriate help if your skills and experience are not enough to help you manage a business effectively.
And the best part of seeking help? You don’t have to do all back-office tasks yourself. You can outsource tasks to external providers to help you with pretty much everything, including data management, marketing, accounting, research, and information technology.
2. Poor Location
Having a great product is one thing, but it won’t matter much if you haven’t strategically positioned yourself where your customers are. Customers don’t just want your products to be remarkable, they also want the convenience of being able to access them from where they are. Here are three key location factors to consider when setting up your business:
- Where your customers are situated
- Where your competitors are located
- How accessible your business is in terms of traffic and parking
Many startups fail because of over-expansion. There’s a common misconception among business owners that expansion increases their chances of succeeding as a startup, but nothing could be further from the truth.
There are certain aspects that have to be considered before you can expand, say for instance the strength of your customer base and your profit margin. So, rather than rapid growth, focus on gradually and consistently widening your enterprise.
4. Too Much Time Networking
Isn’t spending time on networking a good thing? It is.
But too much networking also means you are wasting time learning things that you could have learned online in less time. So, instead of just randomly attending networking events, settle on a few that will be worth your while.
5. Lack of a Digital Presence
We live in an era where things have become extremely fast-paced and if you don’t keep up, you’ll be out of the game before you even begin. So, even if you won’t go all in on the internet craze, you should at least have a website where your customers can learn more about your offerings and other important information.
Creating social media accounts for your business also helps you establish a digital presence and take control of your brand, as well as giving your customers a platform to voice out.
6. Starting a Business for the Wrong Reasons
Why are you starting your own business? If you are in it for the money, what happens when money isn’t coming in as much as you’d anticipated?
The intent behind going into business is just as important as how much hard work you put into achieving your goals. Passion and personal interest are a much better guarantee your business will succeed than a drive for money.
7. Inadequate Funds
Money is important to be able to run the day-to-day operations of your startup. You need money to make supplier payments, to conduct market research, to pay your employees, and so on. Then there’s other miscellaneous expenses, including tax. As a result, you might end up running low on funds and this might eventually force you out of business.
To ensure that you don’t run out of cash, make sure that you do a projection of the funds you’ll need and as much as possible try to align your expectations to reality.
The Bottom Line
You know the old expression, “Experience is the best teacher?”
Well, failing isn’t fun. But if you put in enough hard work and have detailed plans the rewards of running a successful startup can be huge.
Avoiding these seven common pitfalls will help you create a startup that will stand the test of time.