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A lot of people these days are drawn to business for numerous reasons. Everyone wants financial freedom, having to call the shots yourself without being answerable to anybody. A business offers you that and so much more. Over the years, the numbers of individuals going into businesses have actually increased, but have you ever wondered about the success rates of all these startup businesses? It is quite disquieting to learn that a whopping 90% of startups fail. A study carried out back in 2019 discovered that 9 out of 10 startup businesses fail.
The numbers are scary, aren’t they? In this article, you’ll get to learn why nearly a hundred per cent of startup businesses fail and what to do about it.
One of the reasons why 90% of startup businesses fail is due to a lack of creativity. Business is a combination of science and art if we’re being frank. Creativity is crucial to the success of any business. An entrepreneur needs to be creative enough to bring fresh and bright ideas to market their products and services in such a way that customers are drawn to them.
Wanting to go into business and having the capital to finance it isn’t enough, you need innovation in order to stay ahead of the curve. There are so many business ideas out there. This makes the competition pretty stiff. Jumping head-first into the business sector without a solid blueprint is just another recipe for disaster.
The solution to this is not to rush head-first into anything. Take your time. Think of ways to make your products and services unique. Come up with something new and fresh. Customers love new products, fun products, products that scream innovation.
Another reason why 90% of new businesses fail is insufficient knowledge backing them. For a startup business to be successful, proper and adequate research must be carried out regarding the products and market availability. This is one of the first things you need to know as an entrepreneur.
What is the general public in need of right now? Is the market readily available for me?
How much would it cost to finance this business?
What is the competition like and how can I stay ahead?
How do I generate clout for my business?
You need to ask yourself these questions and set out to find the solutions to these problems.
Check out these steps to help you make proper market research for starting up a business
The problem with trying to create the perfect product at an early stage is that, regardless of all the hours put into research, you might still come up short in a real-world application. What you need isn’t a perfect product from the start, what you need is MVP.
No, not the most valuable player but Minimum Viable Product.
Minimum Viable Product refers to any version of a commodity that has enough features to be usable by early-stage consumers who can critique and provide feedback for the further development of said commodity. This is a very useful technique in the sense that by the time the product is fully developed, it will be something that customers really want for the reason that it was developed according to their taste.
Customer satisfaction is always a top priority for any business, and what better way is there to satisfy customers than to give them exactly what they want?
This is something that you should truly focus on a mental level. Let’s face it; the majority of people go into various businesses in order to make money. But if money is your only motivation, then it’s safe to say that your startup is bound to fail.
You need the desire and passion to seek to make a difference in the market with your goods and services. The need to make a difference will invariably fuel your innovation and push you to do more, to be more. Success doesn’t come without desire and perseverance.
A solid reason why 90% of startups fail is that entrepreneurs give up easily once they hit a bump in the road. Those who desire success dig in deep and find innovative ways to bypass their challenges, and in so doing, they open doors of opportunities for themselves.
Passion is one of the best qualities of an entrepreneureur, and if you lack it. Well…
As your business grows, you will need to keep up with the pace by hiring a team. It could be just one person or more, regardless, the type of people you hire will have an impact on your business. You do not hire an engineer to do the work of a doctor.
To avoid falling into the 90% statistic of failed startups, take your time and search around for the best people to help build your business to the level you want. We all need some help at some point in time, so why not get the best possible help for your business?
Another reason why 90% of startups fail is their inability to adapt. In order to be among the 10% who see their startup businesses thrive, you must be able to adapt to situations.
A market can be a turbulent place as things are in constant motion. Being able to adapt to these changes, even going as far as making those changes work in your favour is a priceless skill. With it, you will not only have the upper hand in dealing with competitors, but you will also have longevity in the business.
You must be able to see these changes and act accordingly in ways that will see you succeed.
90% of startup businesses fail because the business owners are unable to adapt.
Another top reason why 90% of startups fail is largely due to funding; overfunding or underfunding. Underfunding occurs primarily due to insufficient research by the entrepreneur. When you venture into a business underestimating the cost to run that business, it will inevitably crash.
You might raise an eyebrow at how overfunding could make your startup fail. I mean, isn’t lots of money good? You may be right but not entirely. Overfunding for startups is a double-edged sword. When there are excess funds for a startup, it speeds up development and the business expands rapidly.
That sounds great, doesn’t it? Well, here comes the tricky part; when a startup business expands at that speed, it gives rise to more expenses in hiring personnel, product development, and marketing. The warning light illuminates when revenue can’t keep up with the massive expenses; this is what experts call a negative operating cash flow.
A startup may fail due to any of the reasons mentioned above. A problem known is half solved, isn’t it? If you are just starting a new business, you will do well to read this article carefully and avoid the mistakes that lead 90% of startup businesses to failure.
This article was written to help be part of the 10% that succeed.
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