None of us wants to think about our startups failing, but there’s an important reality that all founders need to consider, lots of startups don’t succeed. That doesn’t mean we should just give up, though. We can learn from past mistakes and implement specific strategies to ensure the same doesn’t happen to our businesses.
Why startups fail
There are universal reasons why so many startups fail. Some can’t be helped - the pandemic, for example, sent many businesses under through no fault of their own. However, there are some things we can prevent from happening to us.
1. Burnout
Founders work too hard for too long. Businesses are not typical 9-5 jobs for business leaders, which causes many founders to go too far and neglect their personal wellbeing. This has a direct effect on the work due to lack of concentration, fatigue and loss of interest. Burnout must be avoided for startups to succeed. Working overtime is normal in the world of startups but taking time out to see a movie or friends is equally important to help your creativity and motivation.
2. Lack of passion
It cannot be said enough that you should not go into business simply for the money. Lots of startups don’t turn a profit for the first year, so a founder’s driving force must be their passion for the product. Before founders start, they must have a clear idea of why they want to create a startup. Having short term goals also helps you to feel like you are achieving something good and progressing in the right direction.
3. Bad business plan
Having a great idea is the start of any business, but ideas don’t run startups. There are strategies in business that help startups get off the ground. Founders need to know where to find investors, how to forecast income and how best to market to their target audience. Moreover, it’s simply not enough to have theoretical knowledge, you must be able to put it into practice, too.
4. Team Members
When team members don’t get on well, it trickles down and ends up affecting the whole business. An argument, for example, can cloud your judgment and cause you to make a bad decision that takes your business down the wrong route. Startups also require trust between team members because lots of risks need to be taken. Without trust, you might find yourself not taking that risk that could turn your startup into a success.
It’s vital to have the right team in a startup. Every member needs to bring something different and have a skill that contributes to the business. Everyone in the team must also share the same company values so that the right message is being sent out to the target market. This makes the hiring process especially important, as it’s vital everyone is on the same page.
5. Market fit
Unfortunately, 42% of startups in the UK fail because there’s no market for their business. Even if your product is an amazing one; even if you’re providing a great solution to a problem, your business won’t go anywhere if there’s no one to market it to. Founders that have failed have also been known to market to the wrong audience. Not everyone will buy your product, so targeting everyone is essentially ineffective. Instead, it’s essential to pick a specific target audience so you can lean into what interests them.
Startup failure rate
In the UK, 20% of startups fail within the first year. But that also means 80% succeed! It’s important we look at why startups have gone wrong, but it’s more important that we don’t mull over it too much. The nature of startups means they’re challenging and sometimes troublesome, but they are also fun, exciting and full of potential!
