5 Reasons Startups Fail (and Why Each One Can Be Prevented)

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Any entrepreneur knows that in your early days, no one will hesitate to tell you that Most new businesses fail. It’s annoying, but they’re right. However, what the message usually misses is a file Why. Instead, there is a sense of inevitability. Starting a business is hard, of course, most of them fail, right?

But in my experience, there are specific reasons Startups Most of the time it fails. Getting to know them and preparing for them changes the odds in your favor dramatically. I built my business around partnering with healthcare entrepreneurs to avoid these pitfalls – so far with a 6-0 record, with three new ideas emerging. Here’s what you should pay attention to:

Related: 3 ways to avoid suffering from startup failure

1. You hired the wrong person

make a lot of bad appointments. But it is large enough to absorb a certain amount of inefficiency without affecting the bottom line, especially if its operations are sound. The smaller your business, the greater the pain when hiring the wrong person. It can be hard to get back on commitment to an employee who let you down early in the life of a startup.

While there is always pressure for startups to move quickly, take your time with them Your first appointments. For leadership roles, try to stick with people you’ve worked closely with before, even though your best choices are usually appreciated in their current positions. You will have to sell it on your idea, your culture, and your future.

A lot can be done, at least initially, on a limited contract basis—such as accounting, marketing, human resources, and even sales. You may be able to build certain functions into partner relationships, such as borrowing an investor communications team for your limited short-term needs.

Beware of “friends and family” who provide services and help. They mean OK, but having the resources, talent, and accountability in a paid professional relationship can be the difference in ensuring that a project is completed successfully and that timelines are met.

2. You can’t sell

Entrepreneurs are a very special kind of people. sales representatives She is, just in a different way. It’s rare to get both in the same person (although it does happen).

Oftentimes, entrepreneurs have the vision, foresight, strategy, and even the ability to manage a team. Everything is in place. It’s a great product or solution. But where are the customers? Startups often fail because founders don’t realize quickly enough that they don’t have the time, skills, or network to sell effectively. They need a real salesperson to kickstart the revenue.

Sales is a powerful resource that you should have in your team, because it is easily measurable and has a measurable return on investment. When hiring a salesperson, keep their past numbers in mind. Hire only those who have strong networks In and for your work, building relationships is like breathing air. Then motivate them to sell.

Related: The Four Essentials for Building a Startup Sales Team

3. You spend a lot of time on fundraising

It’s hard not to look around at the attractiveness of the eye capital increases You see it advertised in commercial and commercial media every day and think about how fast you can grow with that money. This startup raised $30 million. This sum raised $50 million. It’s 200 million dollars for this.

What was not mentioned in those press releases was the amount of work the founders put into those efforts. Many founders spend half or more of their time raising money. When they’re in the midst of a surge, all they think about is 24 hours a day.

Meanwhile, they lose ground in the problem that their company exists to solve. Courting millions of venture capital makes perfect sense for some companies. But before you go down that route, ask if your company can essentially operate without you. If you can not continue to boot and search for Alternative Financing Arrangements or organic growth can prevent a startup from derailing.

Be sure to ask: How can this investor support your vision and growth, regardless of the capital injection? Do they have a common mission, a team of experts to help provide strategic direction, and a proven network of people in your field And additional relationships or resources, such as financing and marketing support?

4. Your investors have different incentives

If you seek outside investorsMake sure you understand their motives. What do they hope to get from this investment? What does success look like to them? What are their secondary and tertiary goals?

Also, consider what you might be giving up when agreeing to accept an investor. Do you retain control over decision making?

An investor looking to see a return. Of course, you are too. But often companies that prioritize mission above revenue are, at least initially, more successful in the long run. Is the investor We believe in your mission? Is their return schedule reasonable?

While raising money can be a huge drain on time, disagreement with investors can be even worse. Evaluate the fit to ensure that you are aligned with your vision of success.

Related: 8 things to consider to find the right financing option for your startup

5. You chose the wrong name

Words are very important. everything from The Company’s name As for the language you use to describe your future vision, it is very important. It sounds like the simplest thing, but the terrible name is a fatal blow to a startup company.

Don’t fall in love with the name from the start. You may have decided on a name that is meaningful or personal to you, but it doesn’t take into account how your potential customers feel about your work and working with you.

Workshop names. Get feedback. Make sure that it hasn’t already been used, and that the URL is available. The name should have meaning, but it shouldn’t be too obvious. It should be simple, but not the least common denominator. It should be different, but not disgusting. It should be something people want to tell others about.

There is of course another Reasons why startups fail Solving a problem that no one needs to solve or is willing to spend money on, or rush into a market you don’t understand, for example. But as long as you have a good idea, know your industry and surround yourself with the right people, avoiding these points of failure should put you on the path to success.

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