The Top 3 Reasons Startup Businesses Fail and Tips for Success

The Top 3 Reasons Startup Businesses Fail and Tips for Success 
By Lisa King

Starting a new business is not easy. Smart entrepreneurs realize that there are great risks involved in starting up every new business. An unstable market, lack of funding and choosing the wrong team are the top three reasons businesses fail. Below are a tips to ensure that your business will thrive.

Determining Market Need

The bottom line is this: If a strong demand for your product is absent, the business will fail! Approximately 42% of startup companies fail because a market need for their product is non-existent. Therefore, it is crucial to research the size and the health of the market in which you are entering. To estimate market size, entrepreneurs must know the problem their product will solve and the value it will bring to consumers. Once the target customer is defined, one must determine how many other companies have similar target consumers. The next step is to divide the number of individuals who will buy or use the product by the market size to determine market penetration. Determining market value and making changes in your product if necessary, is crucial to the success of your business.

Receiving Adequate Funding

Around 30% of startup businesses never get their product off the ground, simply because they do not have the funds to survive.  Often times it is difficult to find investors willing to fund the business. Networking is a great way to meet investors. In addition to social networking, joining conferences and fundraisers are a great way to meet new people. Above all, make a list of the 10 most influential, professional people in your life and contact them on a regular basis.

Take advantage of fundraiser sites such as Kickstarter, Indiegogo, GoFundMe and Kindful. Share your campaign with friends and family. Involve your community by placing an ad in the newspaper or contacting professionals in your area with similar interests.

When pitching to investors it is crucial to highlight what their return will be and how you plan on getting it. Let’s face it most investors are investing to make money. Joining a startup accelerator or incubator can make your business more appealing to investors. However, before joining it is important to research the pros and cons of each.

Choosing the Right Team

Around 23% of startups fail because they choose the wrong team. Venture capitalists generally invest in the team rather than the product. Wise entrepreneurs choose team members with diverse backgrounds and a variety of skills who are willing to support and challenge your decisions.

New businesses require employees who understand the market sector and are able to provide sound advice. Hiring a financial officer is also critical to sustain viability. A strategist should be brought onboard to ensure the company is making money and evaluate ways to increase revenue. In addition, every company needs a group of megastar employees who are willing to get down to business and gets things done!

Today, starting a new business is relatively easy. But creating a business that thrives requires a large amount of work from a great team of professionals who share the same vision to reach a common goal!