How to prevent Your Startup from Failing
In the past, it was a common practice for businesses to spend a year or two getting their product ready for the market. Sometimes – only to realize that the market doesn’t need or want their product at all. Research shows that 9 out of 10 startups fail due to various reasons, some of which can be easily predicted. So, what are those reasons behind such a high percentage of failure?
We’ve compiled a list of the most common mistakes startups make when developing their products with the idea to help you navigate safely through the dangerous waters of entrepreneurship:
1. Lack of planning. Whether it is a working business model or an understanding of the processes which you have to set up in order to get things going, it’s all a matter of good organization. Research shows that even if you have the best of products and the best of teams, the lack of proper organization and good internal structure can lead to a disaster. With startups it’s easy to neglect the small obstacles because you’re looking at the bigger picture – just make sure you have someone to deal with the smaller one.
2. Lack of understanding what it takes to move a product from the “brain child” phase onwards. We get it that not everyone is a born businessman. If not sure how to move successfully from one stage to another, make sure you have a strong team to back up your amazing idea.
3. Issues like growth and building a trust-worthy team. Having the right team at the beginning is important, but if your startup is successful you will need to expand fast. Lack of growth is one of the main reasons for failure, next to running out of cash. And it’s not a surprise, come to think of it; if your startup is successful, it will be growing explosively in terms of size, securing you long-term funding. This is why it’s vital to know who are the people you’re looking for during all stages of the journey – the people who will help you stand up if you fall and will be able to recover from a blow in the blink of an eye. And let’s be honest: if you don’t see growth in terms of revenue and team over a short period of time after you launch, you’re probably doing something wrong.
The processes you adopt along the way, the people you choose to work with, the cost-model you choose to utilize – you have to consider these factors very well so that you end up with the most appropriate ones for your own product.
Speaking of which, the most common reason for failure is not testing your idea – you can get the full list via this link. Whether it be via a proof of concept, a prototype or a minimum viable product, not checking in with your potential customers can cost you time, money and a lot of stress. Think about it as a blind date with your customers: they might like you and fall in love with you right away, they might feel the need to get to know you better or they might decide to leave the moment they see you. Wouldn’t you be a happier person if you cut the “blind date” stage out of the equation?
This is where opinions come handy. You can opt to test in a few ways:
1. a proof of concept – creating a simulation of your product which can be tested internally to give you feedback whether you should proceed or not at all. Check out my thoughts on building a working proof of concept in this article.
2. a prototype – a working version of your end product which can again be tested to reveal paths to improvement.
3. an MVP – “the bare basics” version of your product which is released to the market to verify assumptions and test market demand.
It’s baffling that 42% of the failures are due to the fact that the market doesn’t want the product a startup is pushing forward. A crucial part of the process then is to validate your ideas as early as possible so you spare yourself and your team such a nasty surprise on launch day. Times have changed and you should be able to bring a product to the market within three months, otherwise it’s not worthy to pursue it at all. This means getting a POC or MVP ready as fast as you can, cutting the fluff and focusing on what’s important for your market. After all, this is the reason why you’re developing a product at all – to fill a hole in someone’s life, right?
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