Entrepreneurs in general, but especially, those who are just starting out their business, succeed as much as they fail. Many mentors have analyzed the situation and their statistics suggest that the failure rate for new startups in their first five years is higher than 50 percent.
Successful entrepreneurs are not those who never fail, but the ones who try to learn from their mistakes. To learn from your mistakes is not only enough; it is worthwhile to learn from others’ mistakes to get better results.
Here are top 5 startups failure and how to avoid them.
- No written plan
Many startups believe in their minds and think the written plan is not important for their business. But, the discipline of writing down a plan is the best to make sure you understand how to transform an idea into a business. Every entrepreneur must take this plan writing as their routine or duty.
- An inexperienced team.
In reality, investors fund people, not ideas. They look for people with real experience in the business domain of the startup, and people with real experience running at startup. If this is your first time around, find a partner who has “been there and done that” to balance your passion and bring experience to the team.
- Not enough marketing skills.
Having a slick word-of-mouth marketing strategy isn’t enough to make your product and brand visible in the relentless onslaught of new media out there today. Even viral marketing costs real money and time. Without effective and innovative marketing across the range of media, you won’t have customers or a business.
- Wrong Partners
Entrepreneurs often fail because they hang out with the wrong people. It includes colleagues who agree with everything the entrepreneur says, “good guys” that others approve but are unfamiliar to the entrepreneur. Good entrepreneurs have a purpose-filter through which they pass their time. A good entrepreneur asks this question: is this partner really worth my time? Entrepreneurs who fail do not have this filter.
- Not Finding Enough Funding.
Entrepreneurs often fail because they cannot raise the right kind of funding at the right time at the right valuation. They use too much of their own money and way too much money from friends and family – which becomes a distraction every time a friend or family member asks about how the company – and their investment – is doing.
Entrepreneurs fail because they do not know how to value their company or phase investments along timelines designed to optimize valuations. They fail to appreciate how much money it takes to meet milestones.
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