One of an entrepreneur's most prominent worries is the fear of failure. No business is future-proof, whether for a startup or a big company. Looking at the latest startups failure rate statistics, 90% of startups during the first two years of commencement tend to fail. Don't let this startup failure rate scare you.
There are some most popular and influential reasons which are the cause for such failure. If you are an entrepreneur, let this be a startup survival guide for you so you can learn from the mistakes of others.
Important lessons you can learn from a startup failure
Before discussing the lessons that one can learn from startup failures, take a look at these statistics, which shows the top reasons for the high startup failure rate:
Ensure there is a Market Demand.
As per the latest research, the most prominent failure of startups is due to the lack of market demand. An entrepreneur can make the greatest product, but it will be useless unless there is a real audience who wants to pay for such a product.
So every entrepreneur must do a market analysis before investing their time in product formation, which will require a lot of effort and time. Before creating a product, you must remember how it will help solve the problem of the people.
Make the right team.
There may be some chances that an employee who offers his services at a very cheap rate may attract you, but you should always keep in mind that quantity in the team doesn't matter, and their cheap rate can do you more harm than good. So always focus on building a team of fewer people who may be a lot more efficient.
Skilled and passionate people will be with you even when your company is going through a hard time. They will help you achieve the company's goal and also help in securing funds. It is best to include people with complementary sets of skills.
Look out for Competitors
Some startups fail because they underestimate their competitors. Always do thorough research about the product your competitors launch in the market because if you don't, you may fail and may not prevail in this heavily competitive market. You should always be prepared to tackle the completion.
You need to be ready for every move of your competition. Moreover, you can do so by constantly evolving your goals and strategies. If your startup fails to adapt to the dynamic environment, it will lead to its downfall.
Product marketing strategies
You may have seen and followed different strategies that successful entrepreneurs have followed, but you still need to know that every businessman should always come up with their strategies. No one in the market knows your products better than you, so you should be the one who should form your strategies by applying knowledge about your products.
You should always ensure that the product you sell satisfies customers to the extent that they would love to advertise your products verbally. We all know that verbal advertising is the best source. So make your products satisfactory.
Take Risk to Pivot
Making changes in your startup strategy to adapt to the current market situation is called Pivoting. Not everything is under your control. However, in this dynamic environment, what an entrepreneur can do is make changes in their plan and policies. Another thing that can be done is to be prepared for such changes. Every startup should maintain a cash reserve that can be used during emergencies.
To make things simple, learn from the case of the Nokia company. In the 2000s, it was one of the leading mobile manufacturers. However, it failed to adapt to the changing market requirements and lost its dominant market position.
Manage Funds Properly
Money is a crucial part of any business. Every entrepreneur can either learn about startup finance or hire someone with great knowledge in this arena. One should also make a detailed plan about where to allocate this resource.
Plan out your outflow and inflow of cash beforehand. Liquidity is also an important aspect of any startup. Many startups run out of cash early in the business, which you must avoid. Even when your startup raises funds, you have to wisely allocate these funds to proper assets.
Learn to delegate
A common mistake that most entrepreneurs make is doing all the tasks by themselves. If you are the owner of a sole proprietorship, then you need to do all the work at first, but with time, you should always focus on hiring more people and dividing the work. Every startup owner should focus on dividing their work among their employees so they can handle other big projects.
If an entrepreneur tries to handle all the work, it will soon lead to burnout and will harm growth. Delegating your work will save you ample time and energy on routine jobs so you can focus on making plans and strategies.
Viable Business Model
How your business is conducted and generates revenue mostly depends on its business model. It is the foundation of any business, and your foundation decides whether the startup will fly or fall.
Even though there are many options of business models that one can choose from, a business model which focuses on generating revenue, in the long run, will be more beneficial for your start-up. This is evident from seeing most successful start-ups have the same business model.
Conclusion
As a leader, having qualities like confidence, teamwork, and quick thinking are a must. But most importantly, you should also be able to listen and learn. A successful business can teach you what to do, but a failed one will always help you decide what to avoid during the business, which is much more important.
Subsequently, business visionaries should remember the previously mentioned points before continuing with their startup to reduce the startup failure rate. If they do as such, there will be a higher chance of coming out on top.