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When you start a business, you’re not just choosing to be an entrepreneur but also deciding to take on the many challenges that come with it. You need to understand what these challenges are and how to overcome them if your startup is going to succeed.
Most startups fail (90% and within a 2-5 year period). But it doesn’t have to be that way. With the proper preparation, planning and tenacity, you can pivot past the mistakes that cause most businesses to close their doors.
Here are some key reasons why startups fail.
Related: Why Most Startups Fail and How to Avoid the Same Fate
1. You focused too much on a product — not a strong team
You should have a strong team in place before you launch your product. The success of a start-up isn’t just about having an innovative idea but also about building relationships with people willing to support you and help you grow.
A strong team will help you achieve your goals by providing advice on how best to market your product or service, telling you when changes need to be made and letting you know when they aren’t working as well as they could be.
Related: Why You Need Diversity on Your Team, and 8 Ways To Build It
2. You were afraid to ask for help
No one is an island. The sooner you realize that, the better off you’ll be in your business ventures. This can mean asking for help with accounting and legal work, but it also means asking for money. Some people won’t want to invest in your company because they don’t understand or believe in what you’re doing, but there are plenty who will — and even more who would have if only they’d known about it!
Don’t be afraid to ask for help from people who have been successful before and are willing to share their knowledge with you (or even just buy a sandwich). Everyone knows how much easier life gets when everyone pitches in.
Related: Asking For Help Is Good For You and Your Business
3. You did not know how to operate an actual business
When people start their own businesses, they often build a product or service and sell it without any thought for the business side of things. They don’t know how to manage finances, deal with employees or customers or manage their reputation. They find out too late that they have no idea how to run their own company, so they fail within months of starting up.
This happens all the time because people think they can just build something great and start selling it right away, and then everything will fall into place on its own while they go back to doing whatever else they were doing before. However, this isn’t how it works: to make money from your startup idea, you need to understand both sides — building something great and running an actual business.
4. Poor naming and branding
Not every business owner is a master of naming — and giving your company a bad name is like letting an anchor down before setting sail: it’ll drag and snag and hinder your journey. But there are plenty of rules that can help you avoid the embarrassment and expense of having to change your start-up’s name later on:
- Your start-up’s name should be memorable.
- Your start-up’s name needs to be easy to pronounce.
- The name should be easy to spell, too. This will save you from unhappy customers who have trouble figuring out how to order something from your company or donate their money toward the cause at hand.
- The best possible way for people to remember what your business does is by making sure its name stands out in some way–for example, by using an unusual combination of letters or including an uncommon word as part of its title.
Related: Choosing a Business Name: 7 Tips for Naming a Business
5. You focused on the wrong things
You should focus on your market, customers, team, product and company culture. These are all important. If you fail with any of these, it will not work out for you as well as it could have. Ensure that you’re focusing on all areas of your business because if one area isn’t working, everything else will suffer. No one will want to work with you if they don’t think your idea will go anywhere or if there’s no future for them in this area.
6. You were impatient!
When trying to start a company, you need to be patient. This is one of the most important things to remember when starting your own business. If you have an idea and want to start immediately, that’s great! It shows that you are passionate about what you do and eager to share it with the world — something that any entrepreneur should be proud of. However, some things require time and patience before they can be successful.
When learning everything about your industry, patience is key. When someone asks, “What do you do?” there should be no hesitation on how much knowledge they should expect from someone who owns their own business (or wants to). Patience also helps us with networking, allowing us access to professional contacts and personal connections.
7. You did not spend enough time looking at the competition
If you do not know the competition and how they are performing, you will be making decisions based on poor assumptions. This can lead to disastrous results. You need to know what they do well, how they do it and what they do not. As a startup founder, you can decide to put your business into the best possible position for success.
Related: You Need to Spy On Your Competition to Succeed: Business Spying 101
8. You gave up before you tried
Failure should be seen as an opportunity for growth, not a sign that quitting is in order. By seeing each attempt as an experiment rather than something that must succeed or fail based on its outcome alone (or lack thereof), we can take advantage of all the opportunities that come with failure: feedback, learning lessons and future refining efforts.