Why do startups fail? This is one of the pretty common questions of many entrepreneurs because startup activity is of great popularity. It seems that at least one out of ten people run their own startups. Why is it so popular and what is it?
A startup (also start-up) is a private or collective business conducted by an individual or a group of entrepreneurs. It’s targeted at finding and satisfying the needs of the masses. There are various kinds of startups. This may be a concrete application, a selling website, etc. Everything depends on the creativity and possibilities of businessmen. This is a certain business model, which is pretty promising if it’s launched properly. However, there are hundreds and thousands of examples of failed startups.
This is a risky business with lots of obvious, as well as hidden impediments. We have analyzed multiple startups that failed. We have conducted special research to define and realize possible reasons that lead to failure.
Our experts have come up with 5 reasons startups fail. These reasons are pretty common and may befall every entrepreneur both experienced and a newcomer. Make allowances for the following factors:
Lack of skills. Mostly, the key reason is that people do not have enough experience dealing with the production and marketing of a new item. In order to succeed, it is a wise idea to turn to a company like Clockwise Software and get the needed assistance.
Poorly developed leadership skills. One of the other common issues is that the founder does not know the product properly. In this case, hiring an experienced CEO is the best solution.
Great expenses. Most business people think that as soon as they launch a product, they will earn money. Unfortunately, any business needs expenses, and developers have to wisely plan them in order not to waste money on useless services and other goods.
No market need. It is very important to research the market and make sure your product is unique as well as useful for the target audience. Analyze your customers, their needs, budgets, etc as well as make sure your product presents a special offer that no similar company has.
No practice with MVP. It is almost impossible to produce a perfect product on the first attempt. MVP is a minimum viable product that you present first and only then, after having analyzed your audience and their demands, you can add some reasonable features that will make your offer wanted.
Hereafter, we will review every point in some greater details. It’s needed to shed more light on these reasons so that you could see the picture big. Thus, you’ll be able to draw correct conclusions and avoid startup failure.
1. Inappropriate Skills
One of the typical reasons why most startups fail is a lack of skills, which are required for the successful development of a business campaign. Oftentimes, entrepreneurs don’t fulfill things that are really necessary for success. For instance:
Lack of experience. A beginner doesn’t know how to launch new products.
SEO optimization is poor. A person doesn’t know how to advertise and promote business.
No interest for consumers. Potential customers don’t recognize the benefits of the advertised products.
If you want to be successful, you should develop your own skills that lead to a victory. If you feel that you’re missing something important and aren’t able to promote your web products/services, it’s better to turn for help to an experienced professional company, such as Clockwise Software.
2. Ineffective Leadership
The second issue is associated with leadership skills and a dependable team of workers. Many beginners aren’t able to recruit professional workers and fail miserably when it’s required to motivate them. As a result:
People aren’t organized;
Productivity is low;
You don’t earn enough;
Your business fails;
Your workers should recognize a leader in you. In order to succeed you ought to summon all your strength and enthusiasm. It’s necessary to continuously improve your skills and be a self-confident leader. You should be more organized, dedicated to what you do, and be ready to face multiple impediments. Most people are not ready to spend 80 hours every week. They never think that it should take that long. Being a leader means to sacrifice a lot. You should be passionate about the market.
Nonetheless, it’s not easy to have a progressive startup app development at once. Under the condition, you think that this task is too difficult you should hire specialists. Approved experts have the necessary leadership skills to effectively organize the working process, encourage the staff, accept challenges and find effective solutions.
3. Great Expenses
Another common reason is an issue of money. Many businessmen strongly believe that after they launch a brilliant project, they will instantly earn heaps of money. In the meanwhile, the number of their investments is actually miserable. Every startup requires huge investments. This means that you will have to tighten your belt and wait at least a few months until you earn something. Many people:
Choose non-perspective industry;
Spend money on unimportant things;
Invest during the financial crisis;
They also have:
Poor leadership abilities;
Bad knowledge of the market;
Bad understanding of your own product;
Poor advertising campaign;
Low SEO optimization.
The wise people know what should be bought and what isn’t worth a penny. Understand your needs and concentrate on their stabilization. Reject all other needs of lesser importance. Do not burn out your cash.
4. Know Your Customers’ Needs
The final typical reason for failure is a low interest to what you sell. Many inexperienced entrepreneurs are dreamers. They have a certain dream and wish to sell products and/or services they wish without giving heed to the actual needs of customers. This is a huge mistake. You should always keep in mind that the main objective of any startup is to satisfy and meet the needs of customers.
Properly study the market and the needs of potential customers. Think which products and/or services you can sell and create your marketing strategy. Recognize your targeted audience and think about how to deliver your message. Commonly, people use social media and searching engines. Always pay attention to the recent alterations and requirements of your customers.
5. The Absence of MVP Practice
Never try to launch a complete product with all necessary features instantly. You’ll fail because you don’t know the actual needs of consumers. Begin with MVP. Test a prototype of your product and always ask for the feedback of online users. Afterward, fix all the drawbacks and improve your product until it’s perfect. Your product should fully meet the demands of users. If you hurry and launch an untested product at once, you risk losing your money and time. Give it time, test, consult with the specialists, hire a specialized company, and make a worthy proposal.
It’s obvious that the launching of a business model is utterly difficult. You should take it seriously and act responsibly. Be ready to face lots of challenges, and the desired success will become a reality.