How Many Start-ups Fail?

While starting your own company can be extremely exciting, it can also be very stressful. The number of start-up businesses that fail is currently around 90%, causing entrepreneurs considerable extra pressure. Entrepreneurs have a better chance of reaping future rewards if they conduct extensive research and planning in advance.

Recruiting outside experts can help too. Startup advisor responsibilities include providing financial planning support and assisting with business plan development. In addition, there is plenty that entrepreneurs can do to help ensure their business becomes a true success story. 

Here, we explore common reasons why start-ups fail and how you can help your company succeed. For example, naming performance objectives at the outset can help keep you on target to reach your goals.

Common Reasons Start-ups Fail

Knowing why so many start-ups fail can help prevent you from making similar mistakes:

Inadequate Cash Flow

Getting the capital in place before you start your business is crucial. Not only must you generate the right amount, but you must also obtain it from reliable sources. You could approach a bank, venture capitalist, or an angel investor. If asked “Do angel investors have to be accredited?”, you should know that it is a requirement in the US that is in place for your own protection.  

These varying capital sources will attract different repayment structures or other terms and conditions. Ensuring you get the right one for you and your business is key to having the most appropriate cash flow possible. Efficient cash flow allows a company to adapt and react to the business environment around them as skillfully as possible, and gives them the best chance of success.

Lack Of Market Research

Launching into a market without proper research is the most common reason companies and products fail. Entrepreneurs may think they have a great idea, but they also need to know what their customers want. If there isn’t a customer that wants a new product or service, at the price point the entrepreneur is offering, it simply will not be a success. 

Too Many Competitors

It could be that you are trying to launch your idea into the wrong market. Often, that is because your product or service already has too many competitors offering similar items or services with little discernible difference. While it is still possible to make it in an overcrowded market, it is critical to differentiate your product or service in a meaningful way. That can be price, quality, branding or any other means that makes a customer buy your product over another. 

Ways To Help Your Company Succeed

There are always ways to help your company succeed, such as: 

Know Your Customer

Know the customer base you are targeting. Don’t stop at just identifying what your customer wants and needs. It will help if you know your demographic by age and income, along with anything else that enables you to understand potential customers as deeply as possible. Zoning in on a customer niche can be profoundly helpful.  While having a specific audience may mean you have a smaller market, it can help you target your audience far better with what you’re offering and how you offer it. 

Set Goals

Setting goals is a way to stay on track. Set yourself at least five performance objectives at the initial stages of your company to ensure that your goals are measurable. Also, be specific. Anything lacking detail means that you may not be as directed in your execution as you should be. Ensure your goals are attainable. Not only does achieving them give you a feeling of success, but it also will continue to motivate you.

Be Resilient

Finally, being a business owner is beset with ups and downs. Be sure that you have a thick skin that allows you to move on from setbacks. Being resilient does not mean shrugging off mistakes. Instead, it means learning from them and realizing how preventing that setback from reoccurring can help you be successful in the future. Succeeding as a business requires plenty of patience, a great deal of hard work and long hours, along with often not taking no for an answer. 

Starting A Successful Business

By arming yourself with the best knowledge possible, you will help your start-up succeed. As a large proportion of start-ups fail, you need to do all you can to protect against that. It can be very tempting when you have an exciting idea to dive headfirst into it. But, proper planning can help you circumnavigate problems so that they don't cause you issues down the line.