CB insights shared with the world a research-based infographic showing the 20 reasons why start-ups fail according. They are ranked according to percentages. The highest is no market, standing at 42 percent, followed by the start-up running out of money at 29 percent, and lastly at 23 percent is not having the right team. Other factors entrepreneurs talk about, both those who have succeeded and those who haven’t, is that lack of perseverance and focus are detrimental to the business.
Why Businesses Fail?
Here, we explore red flags to watch out for to avoid the same pitfalls.
A good idea is not good enough
People who come up with ingenious products or service offerings are not guaranteed a seat the table in their respective industry. If you have something in place and not once have you thought about potential users, then you might be headed for trouble. Basing an entire business on an assumption rather than the end user leaves entrepreneurs surprised that no one wants their products.
Another red flag is if you are not getting buy-in from your immediate network. If you want to start a distribution business of wholesale sliced fajita chicken breast meals and no one around you has a subscription then you ought to reconsider the business.
Succeeding is simple; you need to solve an actual problem people have and address it well. Undertake customer research to find out if there is a need for your business. Assuming that something is nice is not enough to get people to open their wallets, not even wealthy people. Anyways have the user in mind; if there is no interest during this phase, don’t bother.
Start-up money should focus on the product and the user
Money is a finite resource, along with time. You, therefore, have to be very hard handed with it comes to allocating resources. When starting, people end up going for too many coffee meetings, networking events and conferences that over time, consume a substantial part of the total budget. Other things such as scaling, partnerships and untimely marketing also channel money from what’s most important.
As you start, the primary focus ought to be the product or service, along with your target market. It would be more reasonable to spend money on market research and user feedback. Once you have worked out the kinks based on user needs and preferences, other areas will fall in place. If your product is good enough, referrals, word-of-mouth, and free marketing tools will give you a push before you can start investing substantially on other business aspects.
Watch who is around you
One man shows, and an imbalanced group of founders is another recipe for failure. If you cannot be accountable to each other or seem to argue over everything, you are very likely heading for an iceberg. The founder you have around you should work with on the goal with singular focus if you are to survive.