As an entrepreneur, you have probably have heard that only 10% of startups are successful, which is true in some sense. All your success as an entrepreneur depends on what strategies you apply with your company.
There has been an idea that almost all entrepreneurial companies fail to be successful. Although there is no consensus on the figure, to show you how true this statement is, we must conclude that it is at least 60% in all cases.
According to a study by CB Insights, more than 70% of startups do not exceed the first stage of venture capital investment. The research showed that only 46% of these companies were able to raise enough for the next round of financing. However, this percentage decreased as the rounds progressed, obtaining a final figure of 1% success, which are companies currently recognized as Uber or Airbnb.
Why do so many companies fail?
After CB Insights’ research produced such a high figure of failure, the company decided to compile more than 100 companies from different founders to discover the reason for the failures. Finally, they found a pattern in all the trials and summarized the reasons for the failures which is listed below:
1. The product did not fulfill any need in the market
Many entrepreneurs with the enthusiasm to test their idea fail to understand the needs of the market and bring out their product as a solution, with the strong belief that they can persuade their target audience to buy their product or use their services, which most of the time does not end up happening.
2. No money to continue investing
Being cautious with your finances can be the difference between bringing growth to your company or be completely bankrupt. This is why you must define a strategy where you specify where your money should be invested.
3. Choosing the wrong team or not involving potential partners
A lot of company’s growth depends on the people you are working with. It’s important that from the beginning you specify the responsibilities of each member of your team within the company. Ensure that everyone can fully execute their tasks. Having a partner someone who can help and advise you in complicated processes will be of great advantage for your company.
4. Not focusing on the competition
It is important to be aware of your competition’s business models, the updates they make, and how your product/service may have an advantage over theirs. Some entrepreneurs pointed out that disconnecting from what the competition can allow you to solve the market problem more efficiently.
5. Finding the right price considering its quality and cost
Finding the right price for your product or service can be a real headache because you must take into account the quality of the product and the money you must raise to keep the production activities. It is crucial to find a price that is reasonable in relation to its quality which will allow you to cover production costs and obtain a profit margin as you to grow.
6. Creating an unfriendly product
Sometimes entrepreneurs are so strict about how they want their product or service to look, that they ignore what may be best for users. To make your product/service appealing and useful to the public, sometimes you will have to sacrifice personal aspirations.
7. Having a wrong business model
Business models are usually strong allies when looking for future investors for your company, so it is essential to have a tool that clearly describes the need of your audience, your target market, and how you plan to create your product/service. The more planned you are in this aspect, the better, then you will have a better chance of succeeding in selling your product.
8. Having an ineffective marketing strategy
A good approach to marketing strategy will allow you to expand the reach of your product/service and also help you significantly gain the attention of future customers.
Sometimes it can be challenging to differentiate yourself from the competition, so you must make your products Unique Selling Proposition.
9. Not listening to your customers
If you are a company that ignores the needs of your users, then you are destined to fail. Receiving feedback and suggestions from customers is always positive, both for you and for the customers. Don’t wait to reach an advanced stage of the project to meet your customer’s needs, try to adapt from the beginning to the needs of your customers.
10. Wrong time to launch the product
Sometimes the market is not mature enough to accept the product or service. This often happens with technology-related companies as everything moves so fast, therefore many entrepreneurs rush to market a product that may be considered average or not good enough.
11. Losing focus
Many times during the execution of a project, the founders and the team begin to get distracted with other projects and problems that have nothing to do with the current project and end up failing. This is why an entrepreneur needs to take a moment to figure out the right steps and remember what you want to achieve.
12. The disagreement between partners, teams, and investors
Not only is it essential to have a reliable team that has the same objective as you, but you must also make sure that your partners and investors understand the path you want to take with your company and the vision you have for it.
Conclusion
The most recommendable thing to be on the path of success is to follow the right motives and avoid the above scenarios. In addition to this, it also vital to stay positive because that will allow you to recover much faster in case a company begins to downfall.
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