So you’re going to start a business, eh? Creating a startup is now the pinnacle of modern success. The idea of growing a Silicon Valley type company and selling it for millions down the line is the dream of many entrepreneurs. But you don’t hear about all of the startups that fail to get beyond the startup stage.
Avoid failure and take note of these 4 common reasons that the majority of startups never make it.
Premature scaling is the main reason that startups fail. It happens when startups blow their money trying to expand when the market is not there or when other areas of the company get overlooked. To avoid premature scaling, it is best to have a team of people you trust who have a different view of things.
Go slow. You need to exercise patience when growing your startup and you need to say no to opportunities that are not in your best interest.
Many startups fail because there is no market. In fact, most startup trajectories hugely overestimate the market that is available. This is likely because they need to gain access to funding, which often requires convincing angel investors and venture capitalists that there is a huge market available. It can also involve simple errors, mistakenly assuming that people have a need for a certain service when it is not necessary.
Hiring the Wrong People
The largest expense of any startup is the staff. It is critical you hire the right people and avoid time wasters. Consider making extensive use of freelancers instead until you are up and running. While they might not be 100% committed to your goals and values, they will get the job done. A bad hire can have a huge impact on your ability to get beyond the startup stage.
Failing to Budget
Business is a game of numbers. Most startups sink because they fail to keep accurate track of their financials. It is better to be tight with the money until you find the right opportunities. Don’t spend just because you have a budget.
Make the money work overtime by finding deals as much as possible. You also need to have a significant amount of capital for the many unforeseen expenses that will invariably crop up.
The Take Away
Money and time are finite and need to be allocated judiciously. It takes cash to invest in infrastructure, lay the foundation for future growth, and build capacity.
When it comes to the success of any new business, you — the business owner — are ultimately the “secret” to your success. Don’t fall victim to these 4 common reasons for failure.
Need advice? Call us we’ll help you to stay out of trouble.
Bob Milliken is a master marketer specializing in helping businesses achieve outrageous levels of success. Bob can be reached by phone at 604.270.1730 or by email at firstname.lastname@example.org