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Why 9 out of every 10 startup fails?

When it comes to startups, they will always set a 5-year benchmark to see whether their startup is going to be the next big thing or not.

But almost 90% of them won’t even exist before their reach their 5-year mark.

We always have listened and stories of big startups like Flipkart and Uber but these were few of those names which are performing at their best. Many of these startups have failed because of many reasons, it can be either demanding too much growth in short time, weak cash flow, a nonworking business plan, noneffective tactics any much more.

Doesn’t matter how much you have researched and gone through your collected data about how to start a great startup, it will going to fail because no two companies are going to work in the same way.

Let see some of those few points which we won’t focus on properly which are surely going to affect the company in one way or the other:-

1. Not making an effective business plan

A common phrase when we start to build a successful idea is ” we are surely going to have a million users and make millions “, but is this going to happen the right way. Probably not!

The world watched companies like Facebook and Whatsapp making millions of users and raise their community so much big and strong, every company demands. For every work no matter what it is, having a user base is the most priority task one need to accomplish.

But have you asked yourself, “Did I have the business plan to make a huge base of users.”. No, you weren’t.

Before deciding to hit the jackpot you need to have a great business plan which I effective enough to let your dream come true. Even when from the “I have an idea” phase you need to build up a strong business idea in which you need to carry out details like revenue model, break-even analysis, market researchers, management, a point of failures their alternatives and other related things.

So keep in mind ” Always have a ready business plan”.

2. Scaling Too Early

Most of the startup fails because they don’t know when to take a step for their company. This is also called as premature scaling in technical terms.

What does this term actually means?

For your let’s take an example – you need to buy a new smartphone under a budget of $200 in order to save some of your money, but you just saw an ad of an upcoming new phone and bought it. It cost you $250 which in order increased your expense.

Same goes in the case of startup when a company increases its expenses than the value they can afford to lose. Which in turn decreases the companies potential to make it work out for the next time in the manner it has been planned and finally loses way down on their journey.

The basic need to manage all the expenses and needs is to set a good budget. Unless you don’t have an unlimited supply of resources, having a proper budget is surely going to save that extra penny which might play the best part at the time.

Try to set a budget on a lower scale value and always keep aside some value which can be helpful if needed for this value. The need value can be a percentage of your actual value and focus not exceeding it.

3. Be the correct “Sales” person

Just as everyone in this world says ” every CEO is the best Salesman as well“.

The most important skill in every entrepreneur lies the way they know how to sell their product which in turn will generate revenue. It also helps them in presenting and selling their ideas to VC’s and other funding firms.

If you know how to sell, you will generate a better revenue and only then you can scale up your idea, so it is necessary to have that “selling mindset” in you. Yes, it takes time for any to learn this art but some are born with it like the famous Steve Jobs.

The best way is to view these great leaders and learn their ways and tactics, how they work around.

4. Its All about Timing

Luck does play a part but you cannot every time blame it on luck for the failure of your startup. Yes, it can be your timing of presenting your idea in the market.

Timing plays the most important part of everything in our life and it does too here. Let’s talk about the greatness of all now, Youtube and Facebook, these two placed their steps at the right timing.

Youtube was born at time perfect timing when computers do handle functionality of playing videos.

Before Facebook, we do have MySpace but it took the market because of its timing too, when everyone wants to socialize and expand their circle not just to a limited area only. Plan for that perfect timing which will play the most important part in launching your startup.

5. Did you keep a check on your Funds too

Before starting a new company the owner always needs to plan their current funds and the amount needed in case of an emergency too. Lack of funds at the early stage of funding creates the chances of failing for a company.

Every penny spends must generate the right amount of revenue, with time mindset one can make its company work in critical conditions as well.

Try to keep up your burn rates as low as possible and keep in mind that it must generate revenue from its first day of launch.

6. Having a proper Team

Now the phrase ” I am going to have a startup of my own” is most common of all but before having even an idea did you focused on the most important part of your company.

Yes, the Team which is going to make it happen. Not just an idea but a proper team will help you to reach your goal. Everybody Wants to have a million dollar generating company but what about the crew?

You need to ask questions, Am I having a person who I good in management? Does a person among us have good product development skills, negotiating skills or selling skills? Do we are aware of how the market works? and much more.

Having a bunch of people properly looking at each step from the early stage to its final stage of a product is a must to keep an eye on every detail.

As Founders are going to be the most important person in a company do you have or your partners have that passion to make it work right?

Divide your whole management and decide whether a person for a particular task is enough better as expected or not? If not always have an alternative for it ready.

Conclusion

Given are the most important and basic points which when not understood properly will affect you in one way or the other. It will all depend on your decision regarding these points effectively placed in working your idea and keeps it going.——

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