We help lots of new companies get their start in the business world. However, start-ups tend to struggle greatly in the first five years. In fact, 51% of businesses fail in the first 5 years. We’ve compiled a list of the top 7 reasons that we believe cause start-up companies to fail.
7. Failure to Pivot
Often entrepreneurs get caught up in their ideas and they refuse to change or pivot when things go awry. Being able to change and adapt is a crucial skill that entrepreneurs must develop. Nothing goes the way that you’ve planned it, so have a backup and change your outlook when necessary.
6. Not Fulfilling the Customer’s Needs
More than once, business owners are startled to find that their product or service isn’t selling as well as they’d hoped. They think that the features are state of the art, so why is no one buying? The answer is simple: the product doesn’t meet the customer’s needs. Rather than create a product or service that they “think” will fulfill a need, ask yourself “Why would a customer hire me over someone else or what do I have to offer that other companies don’t?” That should be the focus of your business and as well as your selling points.
5. Lack of Focus
Starting a new business is all very exciting, but getting lost in all the commotion is an easy thing to do. Losing interest, lack of motivation, and stress can all lead to a lack of focus on the business and the nitty gritty details. Create a to do list, delegate what you can, and follow up. These things will help you stay focused and get the job done!
4. Not Having the Right Team
As a start-up, you should be slow to hire and quick to fire. It may seem harsh, but not having the right team can derail the project. Those on your team should be focused, enthusiastic, and hard-working. Meshing with your company culture should be a must for all of those you employ.
3. Poor Marketing
It’s been shown time and time again that start-ups tend to struggle with marketing. As a result, the company can’t gain traction. With marketing, it can be easy to focus on the current trends, but that’s not always what’s best for a particular company. Identify your market and then find the platforms that have the potential to reach that market.
2. Failing to Listen to Customers
This ties directly into not fulfilling a customer’s needs. During a trial run of a product or service, customer feedback is invaluable. Making sure that your product is user friendly will result in not only a happier customer but also a better end result. Customer feedback is also useful down the line when your business progresses and matures.
1. Pricing Issues (Over/Under Selling)
It can be difficult to put a price on what you think your product is worth. Do some research, ask around, and make sure that your prices will be profitable to you while still giving you a competitive edge. Don’t over or undersell yourself!
We hope that you enjoyed this list and found it beneficial. If you have questions about starting a business and want some help, reach out to us here or give us a call at 208-227-8335.