“Three out of every four startups fail” is a very harsh statistic and one that a lot of young entrepreneurs will refuse to accept. The popular reasons given are “But people will love my product” and “My business idea is brilliant”. But there is more to a successful startup than just a brilliant business idea. There are good business which have gone under and thriving startups that have run into financial problems. The entrepreneurial scene is complex and unpredictable and taking factors at face value is hardly a reliable way of predicting business outcomes.
Granted, every good business idea has the potential for turning into a successful enterprise, but it takes more than that to gain reasonable ground. Most businesses that fail don’t do so suddenly, but because of a problem that has existed from their beginning. Things like lack of funds, a poor customer base and poor execution can spell doom for your startup. Outlined in this article are 5 signs that your startup will fail.
- You’re running out of funds: Just like with the game of monopoly, no cash means game over. Even the most brilliant plan and the most frugal spending cannot survive if there’s no cash to keep the power on and the water running. This will most likely be the moment when your business folds and you discover that your startup will fail after all. At a point, if you have not yet secured funding and have no reliable plan to get money, you have to face the facts – your business cannot survive.
- You have no clear target market: Getting a target demographic for your business should be one of the first targets for any startup. A target demographic informs on several aspects such as your marketing strategy: i.e who you target with ad campaigns and get site traffic from, the nature of content to produce and several other factors. If you are over 6 months old as a startup and still have no clear target market, it is a large red flag as far as your survival is concerned. Your startup will fail if you have no clear demographic to target.
- You have no strategic marketing plan: If you have been so caught up with developing your business idea that you skipped on developing a marketing plan that will be effective, then your startup is in trouble. The philosophy “if you build it, they will come” is not the mentality to have when trying to get your startup off the ground. If you have no clear marketing strategy, your startup will fail because even the best of services will not get an audience if no one knows it exists. Questions like “How will i reach my target market?”, “What form will my sales process take?” and “How will i get news of my products accross to my customers?” should be foremost on your mind when trying to get your startup up and running.
- You’re not innovating: The first series of products and services a startup provides – while not being poor – will never be the best they give. If your startup must grow, improvement is the name of the game. One of the main killers of businesses is stagnation. If you stand still, you will get left behind. Startups survive – not just by following a good niche, but by making improvements on the services they already provide. Your startup will fail if you don’t innovate, because even established companies look for ways to innovate to avoid failure. This reason is applicable not only to startups, but growth companies as well. Failure to innovate will pull you down eventually as you have probably seen with several companies that were former household names but are now almost obsolete in their fields.
- You’re not working with professionals: I have seen several scenarios where someone has a good business idea, but not the necessary skills to execute it properly. There is no shame in outsourcing for skills you are not proficient in. A foods and nutrition expert who needs a web application for a food recommendation site need not learn web development before starting out. Outsource for the skills you need while you focus on the service you want your startup to provide. Your startup will fail if you attempt to execute tasks you are not well versed in. outsource when you need it, that’s what the professionals are for.
Also read: Tips for choosing the right web developer.
Finding out why your business was on a downward spiral might just be what you need to turn it around and make yourself a success story. The best success stories are those who were turned around when they were on the brink of failure. If you watch for the listed signs, your startup might just be one of them.