Why Do Startups Really Fail? The Real Problems to Remember!



We can talk about startup problems for a really long time, but the truth is that many new companies end up making five basic mistakes. Here are the five basic flaws and what you can do to avoid them:

Market Problems

This is a huge problem and market difficulties can appear in practically all industries. For instance, you may be faced with buyers who do not actually commit to purchases because they do not have money – a situation that is caused by external factors. At the same time, you may have a tremendous idea, but the market timing is really long. You can even have a financial problem and cannot take out a mortgage, as you see your mortgage application derailed by market problems.

Poor Management Teams

A good management team will react. If the company needs to use guerilla marketing, this is the decision that is taken. A bad management team will remain focused and fail to adapt. It is very important that the management team knows how to bring in results. This includes a focus on strategy and adaptability. At the same time, the management team has to be really good at execution and that can strengthen the entire company by making employees love the work that they do.

Improper Business Model

One of the most common reasons why a startup fails is the fact that the entrepreneur is overly optimistic about getting customers. This is such a bad approach. It is not enough to build a great service, product or site to gain success. Remember that you need time in order to get the customers you need for success. With this in mind, make sure that you always spend as much time as possible to figure out what your acquisition cost really is. This is what will dictate what business plan you create. Most of the business blogs highlights that you have to be patient with the chosen business model as, in many cases, it is not properly adapted to the target audience. Consider the audience and always conduct good, honest research.

Liquid Funds Run Out

This is a major reason why startups end up failing. Running out of cash is quite common. The CEO needs to always be mindful of how much money is really needed. Milestones have to be set up and the managers need to always know if those milestones will be achieved or not. Startup value will never change in linear models. It is easy to end up faced with a situation like 12 months without gains, and then six months with huge gains. Liquid funds are needed to deal with expenses that are not expected.

Product Problems

Too many entrepreneurs think that their product or service is perfect, so they have expectations that are not realistic. This is a huge mistake. You need to be sure that the product you offer is of the highest possible quality. This is what will make or break your company. Remember that in most situations, the first product or service that the startup offers is one that will not meet market needs. Revisions are usually necessary. This is why a beta testing period exists. Try to always improve your products and be sure that you deliver something that meets customer needs.

Image credit: CC by Tomasz Stasiuk

About the author: Boris Dzhingarov

Boris Dzhingarov graduated UNWE with major marketing. He is passionate about blogging. Boris is the founder of XpertMoney.com.

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