Running a startup takes a wide variety of skills, a lot of vision and tons of perseverance. When you consider the fact that only 1% of startups are getting founded, the odds are clearly against you. Fortunately, you can increase your chances of success by avoiding the following 8 common reasons why startups fail!
1. Too Many Owners Trying To Impose Their Will
Too many cooks in the kitchen cause chaos and unnecessary difficulties with communication within the company. One founder often isn’t enough as the burden to lead every department can be too much for one person to bear. Anything over three founders often ends up creating difficulty in making collective decisions.
Having 2 to 3 owners working together to achieve a single goal is an ideal option. Between 2-3 owners is a perfect amount for easing the load while having people that compliment your skill set. 2-3 owners with complimentary skill sets are much better than a board of 5+ people who can never seem to find a consensus.
2. Coming Up With Ideas Without The Customer In Mind
Another reason why startups fail is they forget to come up with ideas with their customers in mind. Almost all startups can benefit from spending less time online and more time in front of customers. Involving your customer in your company and finding ways to make them feel special is an essential part of establishing long term success for your startup.
Being close to your customers also allows you to get useful feedback that brings tangible results. Any time your team is brainstorming ideas, it should also be with the needs and wants of your customers in mind.
3. Lacking A System To Handle Workflow
Lacking a system for workflow is a common reason why startups end up overwhelmed with work. Without a system, it’s hard to stay productive as you’ll be forced to chase small issues around all day. If you can train your employees to work within a system, they’ll be able to get more done by knowing exactly how to complete the task and what to do if they need assistance.
Implementing your system is one way you can spend less time managing people and more time focusing on the future of your startup. Building a system makes new staff easy to train and helps you empower your team to act.
4. Only Focusing On Getting Investors
One of the common mistakes startup founders make is chasing after the dream of getting venture capital. However, people fail to consider that raising money requires a full-time effort in addition to running your company. Bootstrapping and proving your startup through sales to real customers are more realistic ways to get your startup off the ground.
When it comes to looking for funding and financing options, making sure you’re working with the right people is also essential. You don’t want an investor who wants to be a dictator of your startup or someone who’s going to be nowhere to be found after the first month. Raising money isn’t as straightforward as it seems.
5. Ignoring The Benefits Of Strategic Partnerships
Many startups fail to grow because the owners aren’t creating strategic partnerships. Working with a company that complements your skills is an excellent way to increase your chances of success. Establishing strategic partnerships with clear objectives and benchmarks is an excellent way to invest in the longevity of your startup.
6. A Lack Of Skilled Employees
Many startups fail to succeed in the intangible parts of running a business. Customer service, sales, bookkeeping, and marketing are all essential departments every startup needs to have. No founder will be able to fill all these roles by themselves.
However, bringing in employees who don’t have the appropriate level of skill is just as bad as trying to do everything alone. If your startup is ready for employees, it’s worth investing in someone who is highly skilled since they can contribute to taking your company to the next level.
7. Difficulty Accepting Criticism
A lot of founders are extremely close to their business idea and therefore sensitive to criticism. It’s common for startup owners to hesitate to let people see their prototypes before it’s fully ready. However, failing to get feedback early on is a fatal flaw that causes startups to fail. Getting the opinions of others and even running focus groups are activities well worth your time to ensure you’re launching a product people actually like.
8. Inability To Manage Money
Finding ways to get the most out of a limited budget is an essential skill for any startup founder. Burning through cash simply isn’t a sustainable strategy, even if you think your product will catch on soon. Issues such as low-profit margin, reoccurring expenses, and high payroll costs hurt your company before you even have a chance to get started. Hunting for the best deal and taking on expenses only if necessary gives you the best chance for success.