A global world is exciting, but it also opens up a world of competition.
There are six elements that can go wrong when you’re starting a business and cause your startup to fail.
CB Insights combed through post-mortem essays written by startup founders explaining why their business failed. The number one reason was no market need for the product or idea.
While this is important to understand, you may feel so strongly about your idea and believe it will create a need in the market once people know about it.
I am not here to tell you that you’re wrong, maybe you do have the next greatest idea to revolutionize our world. However, you need to go into business with your eyes wide open and ready to tackle the obstacles that stand in the way of success.
Create a plan for how you will tackle all six of these elements to give your startup the best chance of survival.
- Focus – without it, you will not lead your startup anywhere
Without passion and focus you will never get your idea off the ground.
It all starts with passion, and then you need to have a laser focus on exactly what you are working to create with your business.
Use that focus to create your business plan or model and set your startup off on the right track.
As you get your business off the ground, maintain your own focus, but don’t shut yourself off from feedback.
Listening to your customers and employees is essential to understand if you product is achieving what you set out to do and how you can continue to improve it.
- Money – a necessary piece of the puzzle to launch your startup
A focused business plan will help you in those tough conversations with possible investors or asking for financing from a bank.
At Wish Group, we are a self-funded company. My video series called Bootstrap provides more insights for self-funded entrepreneurs here: wishgroup.ca/BootStrap
Often, entrepreneurs are led by their passion and hope the money will follow after they get their product out into the world. Unfortunately, the money aspect is a huge factor for why startups fail.
Don’t forget to include your pricing and costing strategies in your business plan. Keep track of what is working or where you need to make adjustments.
- Product – a need in the market and a great product are keys to success.
Even great ideas and great products fail.
If there is no need in the market for your product, and you cannot generate a need, your startup will fail.
Sometimes great marketing is enough to get your startup off the ground to find a niche in the market or to reveal an area in the market where a similar product would fulfill a need.
Even with a need in the market, a poorly designed product or poorly executed business model can seal your fate and a ticket to failure.
- Team – Strategically plan your team from the start and always adjust.
Having the wrong team as you launch your startup can keep you from finding success.
I like to think of my company like a sports organization. The players you acquire during a building phase are very different from the ones you seek out to run for a championship.
Related: A Successful Company Has Asked “Who” Before “Where”
As a startup, you’re in a building phase and you need to focus on a team that is able to wear multiple hats and get things across the line.
Burn out is a very real threat for entrepreneurs and their teams. Consider this carefully and keep an eye on your team for signs of burn out.
Use these strategies to prevent burn out: Burning Out at the Beginning.
Disharmony on your team can quickly lead to your startup imploding or getting outperformed by your competition.
Work together with your team to create a company culture you can all enjoy.
Expand your team with a mentor.
Leverage your network for trusted advisors and to find a mentor who can help you move past roadblocks that your startup is bound to face.
- Adapt to change – the only constant in business and life is change.
As I mentioned, focus is a key element when you’re launching a startup.
Something that is important to distinguish from focus is failure to watch for changes in the market.
You may pride yourself on your focused approach to develop your product and grow your startup, but keeping your head down and ignoring feedback from customers or shifts in the market is not “focus.”
Ignoring feedback or shifts, will make you blind to the adjustments that are necessary to keep your startup afloat.
Failing to change or making a bad change are two common reasons why startups fail. Keep your eyes on the prize and be focused on where your startup is going, but don’t ignore the signs of change and keep your startup as nimble as possible.
- Timing and location – two cliché sayings come together: “timing is everything” and “location, location, location.”
Conducting research can help you plan the timing of your launch, but sometimes we are ready to launch a startup and we hope for the best.
Some startups will fail simply because they were ahead of their time and the market was not ready, only to have the same or similar products revolutionize the market at a later date.
Legal challenges with things like logo or product design can keep you tied up and cause you to miss a perfectly timed launch. Again, research can help you avoid some of this, and consulting with a knowledgeable lawyer before you launch your startup could help you mitigate legal risks before they drag you down.
In a global world, you might think location doesn’t matter as much, but it does.
A bad physical location can drain your monetary resources without generating foot traffic. A bad website or online presence can also hurt your chances for success.
Overall, something like 9/10 startups fail. Entrepreneurship isn’t easy and it isn’t for everyone. These are six important elements to seriously consider and plan for when beginning your venture. If some of these six elements go wrong, they can cause your startup to fail.
I am all about connecting people with their calling and helping them develop their own success.
My video series for entrepreneurs provides a lot of insights, I recommend watching them and sending in your questions so I can help you on your journey towards success.