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While startups are a boosted phenomenon across every industry, a significant percentage of those fail to click in the market. Though there is a generally accepted fact that as many as 90% of the startups fail, a Cambridge Associate study showed that it has not gone beyond 60% during the period 2001 – 2010. Though the study is more promising for aspiring entrepreneurs, still it indicates the need for an innovative approach and unique strategies to win the market. People who take some extra care can escape from a debacle with their ventures. Here is an analysis of major reasons why startups fail and the strategies to avoid them.
1. Failing to Judge the Market
The destiny of every startup is decided by the end-user, and many times, start-ups fail to understand the market and lose at the end. Many startups who are having brilliant ideas do not deliver it to the customers in the most desired form. Therefore, it is better to introduce as a solution to the existing problems of the customers. The startups must convert their ideas into something that makes the life of customers easier. While trying to deliver the customer, the businesses should also assess their business model and growth strategy to make everything balanced. You should remember, AOL, BlackBerry, MySpace, and many others on the list. If they could judge the needs of the market what could have been the outcome?
2. No Proper Strategies for Growth
It is suicidal if startups fail to create proper growth strategies for them. In many cases, people tend to copy the growth strategies of a company that is familiar to them, and that ends up in blunder. Some businesses focus on profit and finally lose the market to competitors, whereas some others go for negligible or no profit for capturing the market and end up draining funds. A balanced growth strategy that fit the industry, but ensuring long-term, consistent growth is the accurate way to win the market. Also, the startups should consider the characteristics of the market before designing the growth strategies.
3. Failing to Market the Brand
Every new startup needs a structured introduction to the market which many people fail to understand. Tech startups are usually established by technologists, and they tend to ignore the branding part by focusing on the product. If you want to reap success with your venture, you should know how to market your brand. Branding creates an identity for your startups and makes communication with customers easier. It is also important to note that branding should be started along with product designing. Many people begin the branding process just before the official launch of the business, which is another blunder.
4. Not Consulting with Industry Experts before Launch
It is a mistake committed by most of the founders of startups, especially technology-based. They think that if they consult with some industry experts before launch, the experts may steal those ideas. Though it is a serious concern, getting feedback from experts would help people to design the product more relevant to customer needs. For tackling this, startups can create inexpensive prototypes of their products with limited features and get the opinion of the experts. The experts might sometimes give highly valuable inputs that make the product a real innovation at the end.
5. Failing to Raise Capital
A significant number of startups face this problem and lead to draining funds to operate. Especially, first-time entrepreneurs who do not have any exposure to the relation between ventures and capital raising usually end up in this mistake. Getting investors is sometimes a cumbersome job which cannot be completed overnight. Chances are there that many investors might turn down the proposals because of various reasons, and by the meantime, the startup would have higher chances of running out of cash. Therefore, it is always better to start searching for funds well before, at least six to eight months, the need of capital.
Conclusion
Many people focus on the product by letting down other factors of a startup, and they realize the mistakes only when those factors immersing the entire project. It is an excellent idea bringing someone who has great exposure to startups to the leadership level. Also, the potential startup entrepreneurs can collaborate with other startups and understand the challenges of the industry before moving on to their own venture – if time permits.
