Today we are going to look at the top 15 reasons why Startups fail, don't worry this is not going to be all gloom and doom. By the time you finish reading this you will know why most start ups fail and what steps you can do to mitigate these risks greatly. The most important Growth Hack you should take away from this process is to reach out for help before problems arise and that you are not superman so don't try to do everything yourself or you will burnout and surely fail !
1. Trying To Do It All On Your Own : being the boss can be very rewarding but you need to fight off the urge to do everything on your own. Savvy business owners know they cannot handle everything on their own so learning how to delegate tasks so you can focus on your primary skills is key. At the same time if you need help you should be willing to reach out for it, the longer you delay getting help the more likely you are to fail.
2. Expanding Too Rapidly : This is a broad topic but some businesses try to take on more work than what they can handle. While closing business is great if you are not able to meet the expectations of these customers you are setting yourself up for failure, another reason that rapid expansion causes problems is due to cash flow challenges which we will discuss later on in the list. So make sure your business is growing modestly but in a consistent fashion.
3. Bad Venue : This is mostly for brick and mortar businesses but if you have an online business and pick a bad domain name you could suffer financial strife. What you need to do is conduct research to determine the location where prospective customers are most likely to find your business and buy from you. While getting cheap rent is appealing there is no sense spending money on a location that is remote or has low foot traffic.
4. Lack Of Tax Planning : Death and taxes are certain so if you are reading this and running a business then you must develop a tax plan. Speak with a tax expert to find out how to minimize your tax liability. If you do not plan your tax strategy now you could end up owing the government and the government will place liens on your business so heed our advice, remember it was the taxman that took out Al Capone so it is very serious stuff.
5. Not Enough Working Capital : Without working capital your business will not survive, working capital to a business what blood is to your body. You can have a great business idea but without cash to keep it going it will falter, taking on debt will not help improve your situation so try to get as much working capital as possible and watch the bottom line at all times.
6. Poor Market Analysis : Before you start a business you need to determine whether there is an actual demand for it. The only way to do that is by conducting market research and based on the feedback provided in the market you will know whether there is a legitimate need for the business. If a person started a business without doing this type of research they will likely fail.
7. Lack Of Corporate Structure : When you are running a business it is vital to have clearly defined roles so each person knows what he/she is doing. If there is no structure then every person will be floating around, this lack of focus is going to weigh down on productivity and if neglected over time it will lead to more problems so make it a priority to always define what each employee or member of management is responsible for so there is no ambiguity.
8. Market Is Too Small : Make sure there is a large enough base of potential customers to justify the existence of the company. If your base of prospective clients is small then your opportunity to generate sales is also greatly impacted which will reduce your chances of attaining success so try to offer something that has universal appeal.
9. Not Enough Or No Insurance At All : Insurance is something that most startups overlook until something happens and they find themselves facing a massive fine. Do yourself a favor and purchase good quality, commercial insurance that will transfer liability offer your shoulders. Without adequate insurance you are asking for trouble so make sure you have coverage in place.
10. Not Tracking KPI (Key Performance Indicators) : This is one of the more common reasons businesses fail. If you are not tracking your performance how will you know whether you are making money or not ? By tracking these KPI you will know whether your business is turning a profit or not.
11. Poor Focus : In order to succeed your organization will need to focus on your ultimate goal but sadly most business owners get distracted which leads to complications. If you want to succeed you will need to stay focused on what is your primary value proposition.
12. Cashflow : This is the mother of all reasons businesses fail, cashflow namely a lack of it. Most small businesses feel they need to offer credit to their clients to get business so they extend net 30,60,90 or 120 days financing but there is a problem. Coming up with the cash to keep things going while waiting for the customers to pay, when small businesses offer more credit than what they can afford they have cashflow problems and usually do not recover from them.
13. Lack Of Contingency Planning : What will your business do if something happened with the power supply or suppliers in general, do you have contingencies in place for your data or other sensitive information ? All of these “what if's” must be accounted for now or you could end up regretting it later.
14. No Succession Plan : Have you thought about what will happen to your business after you retire ? Every business no matter the size needs a succession plan so with that in mind you should plan your exit strategy and how the business will operate once you are gone. Only when these items have been addressed can you have peace of mind.
15. Inability To Adapt : While this is a broad term it hits the proverbial nail on the head. The world of business is constantly evolving and you need to grow with it if you want to remain viable so be willing to adopt new processes and procedures or your inability to adapt could cost you dearly.
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