The Top 4 Reasons New Startups Fail

Why? Why? Why?

So, you’re thinking of starting a new business. You’ve got a product or a service idea that is bound to revolutionise the world and you’re ready to get going, be your own boss and start a business that you own. Today, we’re going to look at the top 4 reasons that startups fail. Hopefully, you’ll take this list, study it, and avoid the common mistakes and pitfalls that many new businesses make.

1.. You’re doing too much of the work yourself

Many entrepreneurs, especially those starting out on a limited budget are tempted to do too much of the work themselves. Everything from marketing, to manufacturing is being handled by a few people who often lack the necessary skills to really pursue their objective. If you’re an engineer, handle the engineering, and let marketing professionals take your product to market. The initial investment not only frees you up to be an engineer, which is what you do best, but keeps you from making marketing mistakes that won’t be readily apparent to you.

2.. There isn’t enough money to go around

Before starting on a new venture, be realistic about your costs. Make sure you have a good, solid idea on what your true costs of getting a product to market are. Many upstart businesses fail because they don’t realize they aren’t going to start making money on day one, and don’t have enough liquid assets to keep themselves afloat until their product actually takes off. Be sure to factor in real world costs, like cell phone bills, web hosting and insurance policies in your cost estimates. These seemingly small costs can make or break your budget, and if your phone isn’t ringing because you couldn’t pay the bill, its hard for potential customers to get in touch with you.

3.. Best buddies don’t make good business partners

It may be tempting to take your backyard barbeque buddies along for the ride on your new venture, but remember: just because you both love golf doesn’t mean you’re going to agree on everything. Its important to establish, from the very beginning who’s in charge of what, and abide by those decisions. Bringing in a partner that can’t, or won’t contribute to the overall well being of your new project is far from beneficial, it will eventually hurt your start up business.

4.. You overestimated your market size

While you may believe that everyone in the world can make use of your product or service, the reality is: they can’t. Or, even more simply: they won’t. It may be a great idea, or a widget that will change the way the world works, but at the end of the day, you can’t make a sale to everyone. Determine who your potential customers are, and focus on them. Don’t ignore those clients who may be outside of your target demographic, but be sure to focus on people who will actually do business with you and you’ll maximise your market impact, and therefore, your overall bottom line.

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