Why Most Startups Fail and Here’s How Not to

It’s easy to

think of the

latest startup like a

pimple in the middle of your

forehead:

you wake up one morning and it’s all you can see.

And then, one day, for no specific reason . . .

it’s gone

Really

“Anyone know what happened to Whatchamacallit?”

After some enquiry, all you’ve got is a handful of rumours and a bucket of spin.

All we know for sure is that it’s over.

Truth is, most of the time, it failed because of the same reasons so many other startups fail.

There will always be

special individuals who

find exceptional ways to kill

their business

majority of startups fail in far more mundane ways

#1. Not understanding the user

Your plans are based on what

you think the user wants

maybe you even have a few buddies who thought

it was cool

and how they like doing things

Be careful about telling them how they should act

Be careful about telling them how they should act

this usually backfires.

#2. Too in love with the tech

You love adding features

“Wouldn’t it be awesome if we could also let them Skype

with the dead?”

You’re building an elephant

You’re building an elephant

but haven’t tested any of it

Maybe users only need the trunk.

Keep it to the core and market -test before you go wild on features

Getting this wrong has massive knock-on effects.

#3. Launching

too slowly

If you’re building that

elephant, you’ll keep

holding back on the launch

until everything is

perfect.

Remember Always

It will never be

fully ready or tested

and

your competition will hit the market with a good

basic solution.

Hence

keep it lean

get to market fast

and

add functions as user demand

warrants it

#4. No real sales strategy

Capturing 20 percent of the market is not a strategy

Who will be

your first

customers?

How do you reach them?

What does it require

to close the

deal?

How many sales people do you need to do this?

What will the sales number look like based on all of this?

Brush past these questions

and

you will have drastically overestimated your revenue.

#5. The market is too small

It’s easy to pick a niche that doesn’t seem too challenging.

Remember you may face competition

even in that niche

and

end up with a potential market that is just too

small to support a sustainable business

Make sure your market is big enough

and growing (And (I know what’s on your mind)

#6. Basic copycat

Enter the many thousand Groupon

clones around the world.

Working international concepts have been launched successfully locally

groupon sosasta

Fashionandyou

Doing this in a busy market because you see current players making tons of money is a sure recipe to burn cash and

stay small.

so

Be different, not “the same but better”

# 7. Fast burner

You ramp up your costs for a big development team to

match the massive revenues you expect.

The revenues don’t happen

and

you’re suddenly burning money faster than a new MP

planning gala dinners

Get into the market with the basic product and start

generating revenue

When the conversion

metrics show you’re getting

it right

then you can grow the spend

There are more reasons why startup businesses fail

But

these are the most important and common

Of course

the easiest way not to fail

is to not start

Fortunately

you’re not scared

and now you’re just a little a little more likely to

make it.

@Abhishekshah