Start-ups often fail. The facts speak for themselves. The voice of start-ups land Silicon Valley says that 90 percent of new businesses don’t even reach the post-start-up phase. In other words, they fail. This nine out of ten failure rate is absolutely through the roof! The big question is, WHY? And more importantly, how your start-up can avoid being one of those 90 percent?
The fact that start-ups fail is something that is taken less and less seriously not just in Silicon Valley, but everywhere now. You’re not Thomas Edison and this is not the beginning of the industrial revolution. Everyone today is trying to create a culture where failure is celebrated, you learn something new and will do better next time.
The thing is, there might not be a next time. Your start-up might have been the last hope for profit for your investor, or your whole life savings. That’s why we consider the points below as the key to a successful start-up. Only well-prepared entrepreneurs will not spend their valuable time and money on failure.
1. Start-ups fail because they often don’t have a competitive advantage
In other words, you don’t offer a product that is better than the competitor’s product. Or, you don’t know how to penetrate into the market better than your competitors. Almost every start-up today opens up its venture with no competitive advantage. That’s why they end up not succeeding at all. But why is that?
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Well, most entrepreneurs out there want to stick with an already tried and proven-before business model. We are talking about the same business plan and the same suppliers too. And humans as creatures of habit love to keep up with the same old things again and again. The truth is, these businesses are surrounded by competitors that use the same business model and the same business plan.
Too many similarities with the competition mean fewer chances of succeeding in the market, especially as a start-up. If you want to be a “unicorn”, you’ve got to act like one on the market. When Ingvar Kamprad founded IKEA nobody previously thought about buying furniture that comes in pieces with DIY instructions. And when Henry Ford built the first Ford T-Model, there weren’t even paved roads out there. But they somehow found their leverage to conquer the market.
You should take a hard look at yourself and think about why the customer would want to choose you instead of your competitors. If you are not able to answer that question, you need to look for the answer fast. Because before you know it, you’ll fall into the 90 percent pool, instead of the 10 percent unicorn pool.
2. Start-ups don’t have enough data
Tracking and measuring are crucial for a successful business. Founding a start-up alone means that you’re talented and educated. But if you’re not able to understand and measure data you’re not a complete entrepreneur. And the truth is, the best entrepreneurs out there measure everything. They take a good look at every element of their business, look at statistics and try to improve where they lack the numbers.
The market itself, for example. Do you ever think about how much time it takes for customers to find and purchase your product? Do you know your customer enough to know from where they come from, or your average purchase per customer? After all, you want your customers to give their money to you, not to your competitors.
Or how much time do you spend on selling your product? What about your sales success rate? How many emails do you send per day and how many customers respond to or engage with them? You have to know your success rate before you start improving it.
Also, we can’t emphasize enough to know what the competitors are doing. Don’t get so confident to ignore the competition. Finding out what they do and how they do it is the key that will lead you to your competitive advantage.
3. Start-ups fail because they are still doing time-consuming tasks
So many companies complicate their time management and management protocols themselves that they end up wasting more than half of their valuable time on trivial stuff.
These tasks are not the things that you should be doing as a founder if you want success. Yes, sometimes they’re important like an important meeting or an important email, but you need to make sure that they will not waste your precious time on them and focus on activities that will bring you the money.
When you are clear on what activities bring you the money, then you can schedule or outsource the trivial ones and focus on what you do best. Outsourcing some of these activities to an assistant is the best possible and cost-efficient solution that will give you the extra valuable hours per week. Not just to you as a founder, but your sales and marketing team will feel relieved too and they can focus on making the numbers.
To sum up, you should never start your venture without having a competitive advantage. You need to make sure that your start-up will thrive in the niche that you’ve picked. Knowing the data too is crucial to be able to predict what will happen in the niche and fix the stuff that you lack. The sickness of modern-day businesses is doing low value or vague activities that are just time-consuming and nothing more. Everyone wants to look busy, but being busy doing nothing as a startup will get you to the 90 percent pile immediately.
With over a decade’s worth of industry experience, at BizzBee Solutions, our valued clients represent and come from different backgrounds and industries. Focused on SMEs and start-ups, we believe in the consistency of hard work and the magic of efforts put in to achieve success. Our business model is vested in our philosophy, we leave you to focus on the core of your business while we take care of the rest for you. From formulating business plans to setting up market research campaigns and much more, our experts align themselves with your organization’s long-term strategy, and while you’re busy in materializing your aspirations, we offer you a helping hand in achieving them.
Danco is a serial entrepreneur, founder and CEO of BizzBee Solutions, proud father of a 2-year-old and a burger enthusiast. He is inspired by growth and goes above and beyond to make it possible – whether it comes to his 300+ clients or his people. Eager to learn more? Follow Danco on LinkedIn and Facebook.