There are many reasons why startups fail within the first year. It is important to take the time to analyze these reasons before starting a business so you can learn from other’s mistakes. Just one of the top reasons startups fail has to do with their unfocused market. In other words the product or service doesn’t match the market being served. There are multiple approaches in business that can cost both time and money for the investors. So, is your business at risk?
Unable to Reach Target Audience
The fact is that startups notoriously run out of cash because they are not seriously considering their target audience. The inability to hone in on a target market and reach the necessary audience has a heavy cost on any business. Without reaching an audience that will support and build your business, customer loyalty is nonexistent and a business will ultimately fail.
Hiring the Wrong People
Many startups fail at hiring the right people and establishing a strong team of employees. Through this, they’re unable to properly to utilize the right skill sets among who they hire. This is unfortunately seen among plenty of startups when they’re attempting to hire new people and build the business. Hiring the right people can make all the difference in driving your business to success. More businesses fail because they are unwilling or unable to motivate and attract good people to work for them.
Lack of Passion
Passion for the product or service is a necessity in any successful business. From the CEO to the newest hired employee, it’s important to believe in the company and have passion for towards its goals and overall mission. Because passion can’t be faked, it is what drives founders to make sure the product or service meets the need of their target audience. Passion however, can’t be the only driver here. Most startups fail because of the preconceived notion that all the owner has to do is come up with big ideas. The owner/founder is usually expected to know their product or service inside out. A true entrepreneur will be able to stand by his or her product or service.
Not Raising Capital
Every potential entrepreneur knows how hard it can be to raise needed capital. It can be an intricate process to raise capital from the initial funding requests to the necessary documentation for incorporation. It is often necessary to keep detailed budget projections and cost overruns to validate the request(s) for capital.
The best laid plans can be derailed when you don’t plan for the obstacles. It is important for business success to have a detailed business plan in place before the initial phase. Avoiding the common “pitfalls” of running out of cash and an unfocused market launch should be every entrepreneur’s goal.