Kudos to you if you are doing the start-up business as building a start-up from the ground up is a brave and strong task. Entrepreneurship and running a start-up may be exhilarating and stressful but on a longer run and professional front, it is extremely satisfying. You get to dictate your own terms and make your own policies, you can work on something you are passionate about, and get the revenue generation with it! It’s a win-win situation all around, isn’t it?
But we all have seen many start-ups failing specially beyond their first year? Let’s talk and explore about it today. However, creating an impactful, successful and sustainable business is not easy at all. There are multiple blocks and trouble along the way and this is exactly why the end result which is a successful business is rewarding. And the obstacles might get missed out to get noticed in the excitement of that first-year start-up and turnaround. And, that can be a huge mistake. Let’s look at some of the most common-and not-so-common-mistakes that might be the reason that many start-ups fail after the first initial year. Make sure you go through all the points and note them down so you can avoid making these mistakes when you have your own start-up! We at My Valuation does not want your or any start-up to fail and that is why we are enlighten these articles for all the understanding and insights about the start-ups and its ecosystem.
Why do start-ups fail? - Most noticeable reasons
Shortage of Cash, strong competition, inconsistent business model – We all have already come across these reasons that cause a start-up to fail. Apart from these, there are some other points which can be the reason such as team disputes or legal troubles that play a major part for start-ups to fail. Now, these are most common reasons that one come across when they look on the internet when one about to start the business. One must have found the solution as well for all these reasons on the same internet as well. But there are other set of roadblocks and issues which people don’t usually talk but they exist in the market. We are here to address, talk and resolve those loopholes so that one can steer their start-up toward successful venture!
Start-up Failures - Underrated reasons for a start-up to fail
People talk and discuss everything on the internet as it is a public space, right? But there are many topics and facts which is not getting the space in the light of other most popular one. Let’s talk and explore through them, shall we?
Here are some of the uncommon and undiscussed reasons that may have a hand in start-up failure:
Lack of market research:
If you have an idea and thinking to launch a start-up, you should know and have the knowledge of all possible positives and negatives about the market and the industry.
Let’s start with “know your customers.”
- Who is going to connect with you for your product or going to buy your service?
- When will they buy from you, and…
- What can be the possible purchasing habits of your expected customers?
Not just the customers, but you should be aware of your industry competitors as well. Any business person would understand why it is so important to know your competitors.
You should know if there is a similar business exists in the market that provides exactly what you plan to offer? If yes, then is it possible that you both can sustain in the market? To make your business stand out in the competitive market, you must have the idea of all the above things.
As an emerging start-up, you cannot afford to make any mistakes.
But then, What’s the solution for this?
The best way to test the market and obtain early feedback is build an MVP – known as “A minimum viable product”
The MVP will –
- enable the chance to collect crucial market data, and
- will help you get in-depth understanding of your customers and
Let’s talk about the next most uncommon reason, and that is
Not Building the MVP:
Continuing with the solution which is mentioned above, — another big reason for start-ups to fail is not building the MVP that is Minimum Viable Product. Your next step after the market reading and research should be launching a working product which does not have to be perfect but it should showcase the individuality and solution to the requirements which no other product has in the market.
The main agenda and focus of this product – better known as a minimum viable product (MVP) – is to learn and improve.
Like mentioned above, MVP is a working product with minimum features that can solve a specific user problem. It helps you to understand and work on –
- Costing you should put to gain early buyers
- You can get the product tested and have the useful feedback from the market
- Provide market needs and demands through your app to the customers to attract early adopters
- After the feedback you improvise the giveaway and features of your product as needed
- Based on the concrete proof and performance report of your product, you can have a chance to get funded by investors
So, not going with MVP can be a major reason for start-up failure.
Lack of understanding of market needs:
Change is the only constant – it applies to the market as well. The markets are evolving always. One needs to evolve with the market trends to keep the business moving forward and thriving. The trends and changing needs of the audience is the key that you must understand to keep the business running.
After the successful research and analysis of the market, one needs to understand the changing time and periodically research is needed to get your product or services up to the mark with changing time and trends and the customer interest which will make your business grow. You just make sure to keep yourself parallel to all the latest market trends so you can be responsive and adaptive to changing market demands.
After the market research, you need to market your product to gain the audience. Most of the time, start-up founders assume that their product or services can do wonders without any marketing and their customers will find them. In most of the cases, founders and entrepreneurs keep marketing as the last option to gain traction which is completely wrong!
You can achieve significant and long-term growth organically but it helps you grow rapidly and faster with the help of direct marketing only. So, make sure that you have a solid and fruitful marketing plan in place from the moment you are ready to go ahead. A practical and workable marketing campaign will help you get a foothold and enough audience even in a competitive industry.
Compromising with Quality over Quantity:
Not just for a start-up but for any established business as well, you are providing the best quality of your product/service because, what you are selling, needs to speak for itself.
Keeping the quality of your product on priority is a must and that is relatively easy to do when you only have a few projects on hand. Once the customer trusts your product and as you grow your business, you will get more opportunities and that is what you aspire to do while keeping the best quality.
If you do not have sufficient team/manpower, it can get overwhelming quickly, which can be resulted in compromising the quality of your products or services. But you cannot afford to lower down your product quality just to have the more quantity production, after all, quality only makes your reputation grow.
In this case, you can outsource for additional assistance and help! This way, the quality will not be compromised and you can keep up with the increasing demand.
Bottom-Line – Why Start-up fail in initial year?
The answers and most common and some uncommon reasons we have already discussed above. There are even other reasons for start-up failure which we have not discussed or stated above.
However, do not get demotivated by the reasons above and don’t stop yourself following your dream of launching your own company. It would never be simple and that is the best part of starting your own venture!
But why we discussed and stated these reasons is to keep you aware of these common / uncommon issues and help you not go to the way most start-ups go and fail. The key to be successful in business is a Patient.
Have the constant growing plan with you, analyse, and learn from the errors. And just focus on one thing: the success of your star-up depend on your ability and readiness to adapt the ever-changing market demands.
Are you having an excellent start-up idea with you and want to go ahead with start-up success and growth? We, My Valuation, are an IBBI-registered firm of valuators that assist start-ups in obtaining accurate business assessments and building a stable foundation for future initiatives.
Contact us now; we can help you with accurate and dedicated start-up valuation services. Visit our site to learn more about our valuation services: https://myvaluation.in/