According to StatisticBrain
25 percent of startups fail in the first year.
36 percent fail in second year.
44 percent of startups fail in the third year.
By the tenth year, a whooping 78 percent of startups are dead.
Why is this so? The reasons for these startup failures might not be far fetched. It might also not be the common lack of funds or infrastructure we are familiar with. But they sure have an impact on startup failures.
1. Fear of idea theft.
Face it! You are scared your idea may be stolen. So you guard your ideas jealously. You tell no one about it. Well this only slows down your progress, because you shield your ideas from potential investors and countless others who may help finetune your ideas or product.
2. Most Startups Work in Isolation.
Another reason why most startups fail to get off the ground is that they work in isolation. From ideation to product launch it is a solo effort. You design your product. You research. You develop. You seek funds. You market. This a whole lot of work for a man to do. By the time you are launched, you are already exhausted. And some people at this point just let go of the dream. Have you ever wondered what would have happened to microsoft and Bill Gates if Paul Allen wasn’t around? Well Gates might have gone ahead but it would have been a arduous task. Look at some of the successful business around. Google, Apple, Yahoo, Twitter. They were all co founded.
3. Most Startups Lack Business Management skills.
Many people are efficient in the creative process of businesses but are disasters in business management. Yes you can design that wonderful product but can you manage a business? The management side of business is a different ball game. Most inventors are introverts. They are busy thinking, busy researching. Their job is to deliver the product and this mostly cuts them off from social interaction.
You must work within your strengths and delegate your weaknesses. If your strengths lie in product creation, it’s only wise to employ or partner with someone with management skills. Steve Jobs hired pepsi CEO John Sculley to boost sales in 1983.
4. Startup founders want to be CEO.
Sincerely, it is a wonderful feeling to chair a billion dollar company. The title CEO also has a nice ring to it. The problem here is that everyone is trying to invent or discover the next big thing. So we can be called CEO. However, not every one can nor will pioneer the “next Big Company”. Some people are just there to support. I think It is a perspective problem. We think those under the spotlight are the stars. Well in a way, but there are no stars without a backstage crew. You should understand your passion and reason why you want to start that company. Don’t be fooled by motivational speeches that says, “you can be anything you want to be”. Not that you can’t. You just need to find your place. Some of those speeches are misinterpreted out of context.
5. Most Startups Want To Pioneer The Next Big Thing.
Many entrepreneurs want a single product that solves all problems. Instead on making a product that solves one problem then add improvements later. Google started as a search engine to aggregate search results in realtime, faster and relevant. Now they own gmail, youtube, google plus, Android and a whole lot more businesses. The time you spend in planning that next big product, competitors are already launched. They have feedback and are back in the boardroom , working on improvements.
Too many startups are just trying to do the same thing or do what others have done. A plethora of social networking sites literally cloned facebook ( Facebook Clones ) for their ideas. This only gives credence to the original product and acknowledges it superiority. No matter how good your product is, you are a second best.
7. Too Many Startups.
You must have heard the maxim “United we stand, divided we fall.” A lot of mushroom startups are established daily trying to break into an already saturated niche. This coupled with their stubbornness and pride to pool up their little drops of water and make an ocean lead to the death of many startups.
Do you have any other reasons why startups fail? Do share your ideas using the comment box below.
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