When you are building your own startup it’s almost like raising your own child! You take care of your startup from the moment of its conception, keep providing it with various supplements in hopes that it will grow bigger to give you return on your investment. But unfortunately for an entrepreneur, nearly 90% of startups fail within their first 3-4 years. In fact, there is a common understanding among upcoming entrepreneurs that for every 10 successful startups, there are 11 that never took off.
It is very hard to understand how it is possible for startups to fail when their founders are putting in so much of their time, efforts and money! But yet there is something very fundamental to a startup that most founders overlook and in the end, are shown the door. So what could be these issues that have got some very high-profile entrepreneurs in a knot? Reading this article will give you an understanding of what can go wrong when it comes to a startup!
1- Be a strategic thinker rather than being opportunistic!
This is best seen through the example of the shiny object syndrome, which is quite prevalent among the entrepreneurs. At its core, it simply refers to the issue of distraction. Many upcoming founders try to do too many things at the same time, trying their hands at everything and not sticking to something. This can prove to be quite disastrous as it does not allow the founder to settle down and become good at something.
This is where you need to be strategic in your thinking, and identify your core competencies. Know what you are good at and work harder than anyone to become the best in it. Align your strengths to develop your startup.
It is important to think of the future and to keep your business updated but when it leads you to lose sight of your goal; it is perhaps not the best option for you.
2- It is not about you or your product!
This is perhaps one of the most basic needs of any startup and a lot of times it goes ignored because founders get lost in their product and the features that it brings along. This is a special problem among the tech-entrepreneurs who while building their product, fail to realize that the end result is for it to get used by potential customers.
Google glasses is one such example where is a major technological innovation but it just could not find use in its possible consumers’ lives.
Any product or service should be strictly modeled according to the needs of the customer. It needs to add value to people’s lives otherwise it is never leaving the market shelves.
3- Be brutally honest when it comes to knowing the market.
Many entrepreneurs often become too short-sighted or start living in a dream world when working on their startup. As a founder, you need to realize what the trend in the market is and how it is developing. It is all about knowing whether your idea might actually have the large market to make a dent and how much of it you can capture with your product.
Now it is ok to work on a niche market, but the returns should be worth it, otherwise, your startup will die a slow death. Many people when they start their business usually don’t worry about the finances, but that is actually an important step. As a founder, you need to crunch those numbers and find whether it is worth doing it!
4- Find the right formulae and then go for scaling!
This is another fatal flaw that has sunk many startups, pulling them down from their seemingly good success into bankruptcy. These days’ startup founders boast on the amount they have raised through VC and angel funding. It is, in fact, the sign of your first loss, marking your first major defeat. It shows how your startup was unable to raise the capital to sustain itself and that is more than enough reason to sound the warning alarms in your head.
These days many founders jump into the trap of raising funding without a sustainable and tested business model. They foolishly believe that it will allow them to scale rapidly. But they fail to see that they are now under an obligation to generate profits for the investors who have put in the money. They end up burning a most of the cash in their journey which soon comes to a screeching halt.
5- Learn from your mistakes and be flexible.
Iteration is the core of the new wave of entrepreneurship and also a way to survive for major corporates. When there is such a high chance of failure it is important to innovate frugally by engaging with your customers directly and understanding their demands. Frugal innovation allows you to fail fast and fail cheap.
Rapid iteration in strategies allows you to adapt to new market changes and puts you in the top spot.