8 More Reasons Start-ups Fail
In this era of flexing and grinding for the Gram, it’s easy to get caught up in the success stories of startups. Crowdfunding, strategic online marketing, and viral content give today’s young businesses amazing opportunities to quickly grow into multi-million-dollar corporations, reaching wide audiences and garnering cult followings. But behind the glitz and glam of the entrepreneur lifestyle, there’s a shocking lesser-known truth: More often than not, startups go belly-up, and the reasons why may surprise you.
Here are 8 more reasons why today’s startups fail, despite the team’s best efforts to stay afloat. If you missed it, check out our previous post, Why Startups Fail, for a glimpse at some of the biggest problems plaguing young businesses.
1. Failure to Pivot Effectively
One of the biggest mistakes startups make is sticking to one process, formula, or method too long. To succeed in business, you must be prepared to switch gears and pivot your ideology or approach every now and then. If not, the market, along with your customers, will surely leave you behind. But there’s more to it than just pivoting; you must also pivot effectively. Knowing exactly how and when to take a different approach is key; otherwise, you risk missing out on important opportunities that can aid in keeping your business afloat.
2. Pricing Issues
Starting a business is not cheap; maintaining one isn’t, either. You do not get to wipe your hands clean once your doors open and your website launches. There are a variety of things to take into consideration when you’re thinking of starting a business. You must prepare for everything, from office/warehouse rent/utilities, employee salaries, product components, shipping costs, and more. These behind-the-scenes costs are what cause many startups to go under after only a few short months, so it’s important to factor these costs into the price of your products or services so your bases are covered from the beginning. If you’re not careful, your operational costs can quickly overwhelm your profits.
3. Loss of Focus
This is much more prevalent nowadays than it was in the past, with the insane amount of avenues a business can take. In the age of the internet and social media, everyone is clamoring to find that one thing that will make their company go viral, sometimes at the expense of their goals and ambitions. Although pivoting and shifting your approach is beneficial every now and then, it’s also important to stay focused on the task at hand. Oftentimes, startups focus too much on their visual branding rather than their products or customers, or they tend to move on to a new idea before they’re able to see their original plan come to fruition. Keep your team focused on one or two goals at a time, see them through, then pivot if needed.
4. Ignore Customers
Customer care should be at the very top of every business’s priority list for obvious reasons. If there is no customer, there is no business. It’s your job as a business owner and service/product provider to listen to your customers’ wants and needs, see where you can improve your business model or product lineup, then respond accordingly. The companies, startups especially, that fail to do this are almost guaranteeing their downfall. It doesn’t matter how much capital you start with, without a strong customer base, your startup will not make it.
5. Legal Challenges
Almost every aspect of business is governed by some law or regulation, so it’s important for entrepreneurs to be knowledgeable about which ones apply to their business. Unfortunately, many startups make the mistake of skipping out on legal services that can ultimately help them handle future issues if/when they come up. If these legal issues are not addressed or handled correctly and quickly, disaster will surely ensue and your business will be derailed, potentially indefinitely.
6. Failed Expansion
There comes a point in every business’s journey when it’s time to grow and expand. This is an important step in the process, and it usually comes as a result of some capital gain/profit; it’s a cause for celebration! However, you must be cautious and strategic in your approach; otherwise, you run the risk of doing too much too soon and exhausting your operational budget. Take a slow and steady approach to expansion and make sure your moves are in line with what your customers want.
7. Lack of Passion
A lack of passion can come from a few different things, one of them being a desire to do what’s popular versus following your company’s purpose. It’s yet another side effect of the social media era, and it’s caused a lot of startups to close their doors. Passion is what will drive you forward in your business journey; without it, there’s no reason to do any of it. The desire for money, fame, and power will only get you so far. You need sheer will and determination to push past the difficulties you will surely face.
8. Product Launch Mistimed
There’s nothing worse than having a stellar product but launching it at the wrong time. This is why it’s important to hold in-depth business meetings with your team to strategize the best way to move forward so your blood, sweat, and tears don’t go to waste. Take note of what your competition is up to and what your customers are looking for, then determine when it’s the best time to strike.
Let these business pitfalls serve as a warning for aspiring entrepreneurs. The entrepreneur lifestyle may be what’s in right now, and you may be eager to leave your 9-to-5 behind once and for all, but there’s more to business than what you see on Instagram. Your customers must be your priority, you must remain passionate, and you must have a sound business plan in place that takes everything into consideration. Your customers and team will determine whether your business succeeds or not. Don’t fall victim to the fast-paced energy of the business world.
What challenges did you run into when you started your business?