There is, unfortunately, no guarantee your startup company will succeed, as most new businesses are vulnerable to failure during their first few years. There are several factors that can go against your budding business, such as a lack of market research, financial problems, or inexperience.
If you want your new business to not only survive but prosper, make sure to read the following five reasons why your startup could fail and how to avoid it.
1. A failure to solve your customers’ pain points
While you might believe you have an amazing product and a killer brand, your customers could think differently. Many customers are reluctant to buy a product from a startup, as they might not trust a new brand and their products.
To convince them to become a customer, a startup needs to promise to resolve a pain point. If they don’t, their target customer might be more likely to turn to their more established competitors.
Common custom pain points can include:
- Extortionate product or service fees
- Expensive delivery charges
- Long processes
- Complicated fees
- Poor customer service
2. An inability to raise capital
Raising capital for a startup can be no easy task. Many potential investors are reluctant to sink their finances into a budding business, as 90% of startups reportedly fail. What’s more, many entrepreneurs will leave it too late to raise capital or will target the wrong type of investors. It is therefore important to do your homework to find the best investors and raise capital before the company’s finances start to dwindle.
3. A lack of security
Many aspiring entrepreneurs wrongly assume they are safe from a cyberattack, believing hackers are more likely to target their larger, more established industry rivals. Unfortunately, a lack of cybersecurity can signal the end of a startup before it has got started.
According to the US National Cyber Security Alliance, 60% of small businesses cannot sustain their operations over six months following a cyber attack. As the average hacking clean-up costs $690,000, a young startup company might be forced to close its doors for good.
Startup owners should not overlook the importance of cybersecurity when getting their new business off the ground. Visit www.mcafee.com to find dependable security software to protect your operations, such as endpoint security.
4. Poor leadership skills
It doesn’t matter if you are filled with creative ideas and have an exceptional business mind, if you cannot both lead and manage a team, you may as well close your doors.
A lack of leadership can lead to a lack of organization, which can slow down your startup’s productivity. Plus, limited leadership skills will make it difficult for your company to transition from 10 to 100+ employees.
5. Zero passion for your industry
Starting to business primarily to make money will more than likely be your downfall. A lack of passion for an industry will make it difficult to pull yourself out of bed every morning and will stop you from spending 80 hours per week on your business to make it a success. You need to be filled with passion for an industry and be dedicated to making your target demographic’s lives easier.