Nearly every day we read about a new startup. Someone clever “spotted a gap in the market”, and presto, they’re running a multimillion-dollar business selling the latest gadget to kids or maybe another pre-packaged healthy meals option for time-pressured parents.
Then, some months later, you hear about the bust, and (sometimes) the lawsuits that follow. It’s said that nine out of 10 start-ups fail often within the first couple of years. So where does it go wrong for startups?
Here’s 10 ways to give your business the best chance of survival.
1. Be deeply interested in what you’re considering
If you’re not constantly thinking about this idea and plotting and planning the ways forward and how it will benefit your customers, then why are you doing it? The idea should be the kind that maintains your interest and commitment. If you’re only thinking about earning big bickies because everyone wants “in” on this concept, then brace yourself for eventual trouble.
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2. Be resilient and observant
This applies to both you and the startup team you’ve assembled. In these early stages, there will be knockbacks, criticisms, even insults that you’ll need to weather. You also need to be switched on to marketplace developments in your chosen niche, and the competition because very frequently, people in different parts of the globe get the same idea at much the same time! This is known as multiple discovery. Registering patents or trademarks becomes rather necessary.
3. Make sure you have sufficient experience in your team
Having experience, training and knowledge in the niche you’re developing is a big step forward, or at the very least, if you already possess business nouse in similar areas. It may look easy to start a great restaurant because you love good food! But it’s not. If you’re wanting to manufacture a brilliant new fertiliser, it helps if you have an agricultural, engineering or chemistry background or at the very least, gardening chops and credentials.
4. Ensure a capable, committed and versatile team is behind you
Startups test your individual and collective mettle, not to mention individual and collective skillsets. Too frequently, startups fail because of relational or financial pressures, insufficient breadth and depth of operational and business knowledge and experience, and sometimes because a pig-headed founder would not tolerate differences of opinion.
5. “Gaps” don’t always equal “must-have”
Maybe you had an Isaac Newton moment when you saw some kid playing with a rubber band or noticed some whinges in your social media accounts. You could be right in terms of your “solution”, but that marvellous apple on the head moment could well be what gold prospectors dubbed “a flash in the pan”. That is, prospectors who panned for gold would spot something glinting, only to have their hopes dashed when it proved not to be gold. This is also true of ideas. Forbes Magazine noted that many ideas fail because, really, no-one actually wanted them in the first place!
6. Do your research
If you believe you’re onto gold, then diligent research time (and some initial capital) must be invested — testing the potential buyers for this wonder service. Someone came up with the idea for an online babysitting website after noting grumbles from parents in her playgroup. She prepared a simple but comprehensive survey that she sent around to as many playgroups as possible, and the findings reinforced her hunch; people did want a service they could easily access online, seeking local childminders with appropriate references and police checks. Together with her husband who designed the platform, Find a Babysitter was fairly quickly launched and only a few years later, she sold the business to Fairfax for a handsome sum. Research is invaluable, but don’t just go for confirmation bias — take account of naysayers too as they may provide helpful clues to your product or service’s improvement.
7. Back yourself with at least a secondary and regular source of income
Many startups fail because their proponents were too gung-ho, ditching everything so they could pursue their dream. Many relationships and income streams have been destroyed as bad risks are ignored. Commitment and passion are vital to the success of startups, but never without healthy caution; being careful and accountable for yours and other people’s money, and displaying regard for how your decisions might affect others.
8. Try not to go into debt
Some entrepreneurs have a definite whiff of the gambler about them but there’s a tipping point when they could go a little haywire, repeatedly borrowing in pursuit of that elusive pot of gold. Be realistic about the funds you have to work with, grow steadily, and repay your creditors as you go. Don’t grow too fast if your foundations are not sustainable.
9. Listen to the “wisdom of the elders”
Startups can fail because they do not seek or heed the advice of those who’ve been there before. It’s worth bringing on board people who’ve had significant experience in the niche you’re pursuing, and whose advice and expertise you respect.
10. Don’t neglect PPP
To achieve success with a startup requires patience, persistence and prudence.
Startups are part of the lifeblood of ours and numerous economies around the world. They spell life, movement and health. But poorly managed, they usually die. The gravestones are always pause for thought.