Don’t let the numbers get you down if you’re thinking about heading out on your own to develop a new startup. The odds against success can be daunting as you worry about everything that goes into starting a new business. But you can be an exception to the rule if you arm yourself with knowledge gleaned from others’ mistakes.
Why do many startups fail and how can you avoid these failures?
There are heaps of reasons why startups fail, many of which have to do with unique personal situations involving the people or funding behind a project. But there are other problems that you can avoid. Here are a few of the most common and how to navigate around them.
The issue: Wasting time and money trying to save time and money
Trying to take on more than you can handle can lead to massive issues for your startup. Of course you probably don’t want to shell out a bunch of money hiring people, so you might think you can take care of everything from office set up to digital infrastructure. Chances are you can’t.
The solution: Taking advantage of valuable resources, even if they might cost you a little in the short term, can greatly help you out in the long run. Use managed IT services to lessen tech headaches, or have professionals train your new team in how to use important software. Doing so is a smart way to manage your time and will allow you to spend time on other tasks while also saving you from wasting time and money when things go wrong.
The issue: Lack of focus
You might think you’re covering your bases by offering a wide variety of services or products that give you a better chance of striking gold. But in reality you’re spreading yourself too thin. Think about it like a restaurant that offers Thai, Japanese, BBQ and pizza. There’s very little chance a kitchen is good enough to excel in all those areas. Because of this, all the food ends up being average. The same goes for your company.
The solution: The best thing to do if you’re starting a new business is to choose one avenue and concentrate hard on it. Throw your resources into your best idea to really earn a foothold in the industry in which you will be operating. There will always be time to expand in the future.
The issue: There’s no market
You might have a product or service that is perfectly crafted. But if nobody wants it, it doesn’t mean a whole lot. Perhaps a machine that puts on your socks for you every day sounds like a great idea, but does anybody really have an issue with doing so the old fashioned way?
The solution: Make sure that what you’re setting out to do will serve some sort of defined need or shortcoming in the market. To ensure this is the case, try to do some research, whether it be surveying the target audience or looking at potential competitors and seeing where they’ve been successful, therefore getting an idea of what people are looking for.
The issue: Flying blind
Starting a new business requires careful planning. But some people get too caught up in the excitement of building. They get the ball rolling with a good idea, find some money and sink it into something that they haven’t thought through and end up crapping out early. Even the best ideas that deserve to be brought to market can be sunk by poor planning.
The solution: While you definitely will not be able to account for surprises, you need to have a clear roadmap of how you’re going to go about building your startup. Begin with a mission statement that states what you’re trying to do. Develop a strong business plan early that can act as a roadmap for business. Think about contingency plans and plan out a growth strategy. All of this forward thinking will save you headaches and heartache later.
The issue: Running out of money
This one is pretty self-explanatory, but it is still probably the most prevalent danger to the success of a startup. A great idea and business plan don’t mean much if you don’t have the means to carry them out. And the means to carry them out can often be boiled down to money.
The solution: Don’t jump in before you’re ready to swim in the deep end of the pool. That means dedicating large parts of the aforementioned business plan to how you’re going to raise money not only in the infancy of your startup, but also throughout its life cycle before your service or product becomes profitable. You should have a strong foundation, both economically and in terms of actual physical tools and assets, in place before you get started.
Starting a new business is not a walk in the park. It takes a massive amount of detail-oriented planning and litres of blood, sweat and tears. There will be successes, and there will be failures. But, with these and other great tips from Saxons, hopefully the former will outweigh the latter.