Your goal is to make a truly successful business startup. Unfortunately, 90% of the startups are going to fail. Even really well-known businessmen like Charles E Phillips, Infor CEO, had some problems when they started out. It is very important that you learn why the startups fail so that you can avoid the mistakes and you can make the business successful from the start.
1. Lack of market need
When you launch a service or a product you need to be sure that there is a genuine need for it. This is where the mistake steps in. Many of the modern entrepreneurs have an idea and they just think that there is a demand.
What is great for you is not necessarily something great for everyone else. Because of this, it is vital that you conduct a serious research and you determine if there is actually a true need for what you will launch. If it is not, the startup will fail.
2. They run out of cash
In an attempt to make the business go forward you can run out of the cash that you have and when it is time to pay the bills, huge problems appear. Liquidity is necessary for every single company in the world. With startups it is vital since the strength of the company is very low.
Vendors will not wait if you have a problem and there is no real way for you to get a quick influx of cash when it is needed. Keep control of cash flow by always underestimating how much money will come in and overestimating how much you are going to pay.
3. Lack of a good team
People often talk about how important it is to have a team when a startup is launched. This is correct but it does not mean that most of the businesses have that right team. You and your best friend do not necessarily form a good business partnership, a team that has the necessary knowledge and experience to make the startup succeed.
In fact, most businesses that are started by best friends fail. There is this belief that everything will work well when the truth is that the knowledge gaps quickly become apparent.
4. Issues with costs and pricing
Before the startup is opened the entrepreneur needs to conduct a good market research that would highlight costs and prices. That is actually done before launching the company. Doing it after can lead to problems.
Even so, this problem also appears after the company is launched because of not being able to adapt. If you absolutely want to buy a product at a specific price for a specific profit, you can burn out everything if people will not buy it.
Setting a lower price would bring in a lower profit but it is still profit instead of nothing at all. With costs, underestimating production costs is quite common and is a problem that has to be avoided at all costs.
Most startups never get past the first year of operation. Founders blame investors; investors blame CEOs, CEOs put the blame on the R&D department; R&D team say the product is fine, the market just doesn’t get it, and marketing people put it all on the recession. Obviously, many startups also fail because the product launched has a poor quality. Hopefully your startup won’t be one of the many post-mortems to talk about.