What are the proven strategies an entrepreneur should follow to ensure that their startup doesn’t fail?
It is said that the failure rate of startups or new businesses is between 80% and 90%. According to the 2023 statistics by Embroker Insurance Services, “only 2 in 5 startups are profitable.” This means that the remaining 3 out of the 5 would either break even after a while or keep losing money.
Considering that the failure rate is higher, you may be wondering if your startup can succeed. The fact is that your new business may just have a chance at breaking even in the first couple of years if it can learn from the mistakes of the startups that failed.
Top on the list on why most startups fail are:
- The inability to stand up to the competition in the market.
- Most startups also fail because the founders or owners lack the hindsight to make futuristic business decisions.
- It is also possible for startups to fail, simply because those businesses had issues with funding.
- You may be able to overcome startup failure if you can create flexible pricing options for your products and services.
Given the above reasons, it is evident that your startup’s failure is likely to be caused by more than one factors. Therefore, you must learn how to ensure your startup does not fail.
1. Analyze the Target Market and Be Ready to Pivot, If Need Be
Wikipedia, the free encyclopedia, defines startup as a “company or project undertaken by an entrepreneur to seek, develop, and validate a scalable model.”
Startups also seek to provide new solutions, products or services to the target market.
However, the service you intend to offer might just not be what the market needs. Also, the market needs and demands might change with time and it is expedient to pivot, when necessary. It’s similar to what we taught you earlier on how to analyze the stock market.
Thus, one of the first things you must do is to pick the right market, after a careful analysis. Here are some tips on how to go about that:
Analyze Your Competition
The fact is that some competitors are already in the market. To stand a chance at grabbing some of the market shares, consider analyzing your competitors, especially their product or service offerings.
Be Ready to Pivot
The market you serve is subject to change, especially with new trends that come. Thus, be flexible to pivot or remodel your business to adapt to these changing trends. If you can predict the market trends, it will b easier for you to know what’s about to change.
2. Monitor Your Startup’s Performance – Keep Your Eyes on the Data
Data doesn’t lie and so does the information you get after accessing your business operations for a while. Sometimes, startup founders go heads-on with the idea that the business is not breaking even because of the massive competition in the market, whereas the data they have proven otherwise.
Here are some of the best ways to monitor your startup’s performance:
- Traffic: how many persons (on an average) visit your startup’s website monthly?
- Conversion Rate: depending on the goals of your campaigns or marketing strategies, how many conversions has your made? It could be the number of persons that joined your email list, the number of sales made or the number of followers on social media.
- Customer Satisfaction: this is usually one of the overlooked metrics and it could have negative effects on your startup. You should aim to have a higher customer satisfaction rate and this can be achieved by helping resolve the customer’s complaints on time.
3. Your Startup’s Team Formation is Important to the Survival of the Business
Hire a good team and you will remain in business for as long as possible. Hire an unprofessional team and your startup will join the growing percentage of failed businesses in the first five years.
Why does the team matter so much in the scheme of things? Here’s why:
- The team would be doing most of the work, so they need to be at their best at all times.
- Your startup’s team also helps to find new markets. You need experts to be able to do this.
Forming the right team for your new business boils down to the following:
- Hire professionals or experts in the respective fields of your startup’s operations.
- The team should understand the goals and objectives of the startup.
- Make sure that the team contributes to discussions, as you need new ideas to scale the startup.
4. Submit to Learning
There’s no doubt that you have an idea of the type of service or product to offer via your startup. However, you don’t have all the knowledge, at least, the knowledge that would get you to the next level.
This is why you must submit to learning. Find a mentor or an advanced professional in your line of doing business and learn more about the industry from the person. Beyond learning from mentors, read a lot of books that can help boost your entrepreneurial spirit.
5. Be Clear About the Goals
While it is important to set goals for the brand, it is also imperative to set clear goals. The goals should follow the S.M.A.R.T. concept.
You also need to make sure that your team is on the same page with you on these goals.
ALSO READ:
- 10 Business Ideas That Never Existed 25 Years Ago
- 7 Investment Ideas for a Tension-free Retirement: How to Retire Rich
- 10 Strategies to Maintain Work-life Balance as a Female Entrepreneur
6. Take Calculated Risks
Let’s say the trends changed in your market and you want to venture into the new trends to stay afloat. A better way to go about this is by taking calculated risks – you want to take the risks, but you don’t want to go too far.
Always think of the long-term projections of those risks and assess how your startup would be impacted by it (negatively and otherwise).
7. Funding Shouldn’t Be Removed from the Equation
Startups are known to raise funds at different intervals, especially when they want to test new markets or validate new product and service ideas.
The initial funding for the business would likely come from your pockets or those of your associates. You can then have a basis to seek external funding.
The fact is that the absence of funding can mar the success of a startup. Provided you have the market certainty and your service or product is worth it, always seek funds to keep the business going until you break even.
Final Thoughts
The success of every startup always boils down to the business dynamics, the quality of service or product offered and the ability to beat the competition.
Also, we must add that you need to be a leader to keep the team motivated, thinking up new ideas for the business and making strategic moves to keep the startup active.
