Most successful entrepreneurs will tell you the nightmarish experience they had for the first 2-3 years of their business. A new startup has a very poor survival rate in the competitive business world. Statistics show that 8 out of 10 new businesses fail within the first three years. There are a variety of reasons why a startup fails in the first few years itself. This post is an overview of 10 things that kill a startup in the first year:
Not Hiring The Right Talent:
The team is the prime factor that will decide your startup’s success. Especially if the product/service depends on the talent level of your employees. Have a team of passionate workers who align with the core interest of your company. A startup needs to be more stringent while hiring human resource than a big company, because usually a startup hardly has 20-odd employees. So the attitude and passion of each employee matters unlike companies with work forces of 20,000+.
Not Focusing On Your Cash Flow:
A startup which has no control over its cash flow will sooner or later face huge problems with budgeting. It is very important that an entrepreneur understand the cash flow cycle of his startup. It is unique to each startup and it is something which needs to be checked constantly. A startup faces the risk of burning up its funds faster than it is receiving money.
Not Adapting Quick Enough:
It is an ever-changing world out there, the world belongs to those who can learn fast and unlearn even faster. A startup needs to be flexible to market changes and understand the changing preferences of consumers/customers.
Not Pricing Your Service/Product Correctly:
Pricing your product or services incorrectly is a fundamental flaw many startups face. Some place their prices very low while other charge exhorbitant sums. The wisest way to set your price is by analyzing your competitor pricing and then adjust yours accordingly. But it may not always be as easy as it sounds, since there are a lot of other factors that come into play.
Not Focusing On Your Core Area:
Too many startups get distracted by their successful competitors who have an array of products/services. As a startup, it is essential that you first focus on your core area and develop it into something robust before focusing on other streams.
Obsessing Over Competitors:
Competitors have always been and always will be there in business. It is a fact of life. There is no point in obsessing over their revenue share, customer list etc. Sure, it is important you analyze your competition but obsessing over them is totally different.
Not Getting Your Business Online:
The world is coming online and it would be dumb if your business has no presence on the internet. Startups especially have a great branding opportunity online. For example, Facebook currently has 500 million members! If you were to think of Facebook as a country, it would be the third most populated nation in the world after China and India.
Not Seeking Advice:
Too many startup do this mistake of not taking expert opinion. The fact of the matter is that expert opinion on certain decisions can lead to much more saving of time and money. Because most experts are aware of the pitfalls that await certain kinds of enterprises. And you need all the help you can have.
Getting Burnt Out:
Most startups have to work twice as hard as an established enterprise. All the employees, CEO are on their top gear 24X7 – this can lead to a big time burn out of your team and you as well. This is where it becomes important to remember that “All Work and No Play Makes Jack A Dull Boy“.
Not working smarter:
Todays world has so many technologies to make your life easier and get work done faster. It is very important you make use of all the tools available to make yourself more efficient. Which means you achieve more in lesser time with lesser effort. There are many industry specific smart tools available today. Think about it!
Have you experienced any pitfalls due to any of the above killers? If yes, let us know below. Also, what would you add to this list? Leave a comment below.