Why do most startups fail?
50% of businesses fail after five years, according to a statistic from LendingTree research. Startups could fail for many reasons, which involve many aspects. The top three reasons based on the research are: 38% are running out of money, 35% have no market need and 20% of the businesses got outnumbered. According to another statistic by Exploding Topics, 34% of startup failures are due to a poor product-market fit and 22% of failed businesses didn’t implement the correct marketing strategies. From these statistics, we could see that one of the main reasons is marketing. Effective marketing strategies are required for success.
How do we prevent failure?
Businesses should be aware of aspects that require fixing or improvement so that they do not affect business operations that will eventually lead to failure. Identifying and addressing the issues will help businesses sustain themselves for longer. Here are some of the simple steps to follow:
Perform market research
It is not always about the team or the individuals in the marketing team. Many assume that it is one of the reasons behind failure. Lack of planning and research is one of the most important things in market research. It is crucial to understand the problem that needs to be solved through market research. Ask questions like these to yourself:
- What unique approach can be taken to gain market share?
- Is there a market for the business?
- What are the main pain points that the customers face?
- Who are our target customers? Competitors?
- What is the best way to reach the target audience?
- What are the current trends in the industry?
- What are the potential risks and challenges?
Effective market research will help us know our target audience better. In this way, it is easier to find a suitable approach to connecting the business and the customers. Knowing your target market thoroughly helps you develop more enticing and relevant products and marketing plans, thus enhancing your chances of success in the market.
Have a business plan
It sounds so simple but it is essential to have one. This could help as a guide so that you could know what the expected results are. Since it is realistic and has analytical projections for the future, you will know what to expect. When potential investors see your company’s high likelihood of success with your business offerings, they will find it appealing and invest in your business.
Use the right tools
Investing in the right tools to reduce repetitive and time-consuming tasks will help you allocate more time to focus on important tasks. It can be daunting since it might be costly for businesses. However, the right tool will make you think that it actually helps a lot to save your time and energy as well as drive results. For example, you can invest in social media management that will help you create and schedule posts on one platform.
The tool nowadays also includes AI, which makes everything easier and avoids wasting time. An example of tools that could help startup businesses would be productivity tools, employee collaboration tools and social media management tools for marketing. Knowing the right tools to use will prevent you from using too many tools that could be confusing and cost too much. You can also opt for the free ones.
Manage finances
Getting into a negative financial situation can be a nightmare for businesses. The worst situations would be running out of cash, accumulating debt, or consistently operating at a loss, which can lead to a range of serious problems and challenges. Hence, a proper management and contingency plan in finances are needed to ensure businesses keep moving. It is hard for a business to grow and develop if there is a lack of capital. Effectively managing finances can help manage any potential upcoming and unforeseen risks. Also, when a business manages its finances well, it can build up financial reserves or maintain a healthy cash flow.
