Here’s why 80% of start ups fail – five pitfalls to avoid
Starting up a business has many challenges and hurdles to meet and overcome. Just 20% of businesses started by entrepreneurs are successful beyond the year and a half mark, with a huge 80% failing during this early period.
Simply not having the cash to keep operations moving is one of the major reasons for this failure, but financial collapse is often the final straw, with many other aspects of the business contributing to this downfall.
Successful entrepreneurs can deftly manage to avoid these pitfalls. Getting a heads up on what to look out for can be greatly advantageous so here are the five most common reasons for business failure and how to address them:
- Not fully understanding or engaging with customers
Customers hold the key to success for any business. Without them, their demand, and their money, a business cannot make a profit. Therefore having an in-depth knowledge of your target market will ensure that produce the right product or offer the right services to generate sales.
Communication with the customer is key. Talking with them, proposing ideas to them, and getting feedback will be invaluable to your operation. This communication will determine your future success and without it, it is easy to take a wrong turn.
- Not finding a unique selling point or niche to differentiate from competition
To truly make your business a success you either need to provide a product or service that no one else provides, or offer the best (whether that’s priced or quality) in your market. You need to work an angle through which to push your business and get ahead, instead of fighting for space with thousands of other businesses.
A USP could be your brand, your product, service or method of supply. You need to make yourself stand out so customers can identify you.
- Not getting your message across to consumers clearly enough
A great brand, a unique product or service and all the makings of a successful business are useless if you do not convey your business to your customers. They need to see you, hear you, and understand what you bring to the table; otherwise you don’t exist to them.
Linking back to the first point, communication with the customer is key. Clear and concise gets your point across with maximum impact as the customer can immediately understand the message, but it must also be compelling to make them want what your business is offering.
- Poor leadership and decision making
Being the founder of a business makes you the leader, the person in charge. Whether you work with one other employee or a hundred, you must be able to relate to people. This comes down to personal development, and having the strength and conviction to lead will be crucial to your business success.
You may have some amazing ideas, but without the ability to properly execute them you won’t turn those ideas into profit.
- Not having a suitable business model and long term plan
Start-ups need the guidance and stability that a good tailor-made business model provides. This plan will set out your goals towards market fit and direct you towards that ultimate end goal. Doing this without losing money at every stage is essential for new start-ups and a business model that utilises tools like lean marketing and minimum viable products can ensure this.
Moving quickly is all well and good but you have to be sure that you’re moving in the right direction. Researching your market and synchronising your business plan with the results should enable you to fulfil the potential of your viable business idea.
Invest in your business and in yourself. It might be a long hard slog in the beginning, but if you do everything right, you could be set up for life.