You could have a multimillion-dollar product idea or a service that’s going to change people’s lives, but that doesn’t mean you’re guaranteed success. As an entrepreneur, there are potholes to dodge and hurdles to jump. Even when things are going well, startups need to stay agile, vigilant, and at the top of their game. There are 5 million new businesses born every single year in the world, and only 10% ever make it (90% of all startups fail).
To make sure you fall in the minority, and not the majority who don’t succeed, these are the things you will need to do.
How to Avoid the Common Startup Pitfalls:
1. Do your research:
Did you know that the most common reason for startups failing is lack of market demand? A report by CB Insights reveals that a whopping 42% of new businesses blame “lack of market need” for their downfall. But with adequate market research, you should be able to avoid this pitfall. Investing in market research prior to the launch of a new product or brand will help you facilitate strategic planning, identify potential threats and opportunities, scope out competitors’ strengths and weaknesses against your own, and minimize your business risk.
2. Get funding:
The second most common reason for startup failure according to CB Insights is poor cash flow. This is why having the right funding is key. Other than bootstrapping and going it on your own, there are a number of ways you can fund a business. These include getting help from friends and family (interest free borrowing), crowdfunding, using angel investors, or banks loans and venture capital.
Additionally, you will need to ensure that any funds are managed effectively. Overspending or misallocating money will lead to fast problems.
3.Hire the right talent:
In a startup infrastructure, people are at the heart of everything you do. So whether you’re hiring permanent staff or onboarding freelancers, finding the best talent out there is paramount. Don’t skimp on recruitment. Do hire in the right city. This Startup Index highlights the best and worst places to start a new business, with London coming up top as the city with the highest startup rate. Bear in mind that cities with the best access to education and higher graduate retention are best for sourcing talent.
4. Keep an eye on the competition:
Being outcompeted is another common pitfall for startup companies, so doing competitor research isn’t just something you should do at the start. It needs to be a continuous project so you can always stay ahead of the curve. Remember to work on your unique marketing strategy. There are both advantages and disadvantages of being a first-mover, as there are for being a second-mover. It’s all about realizing your position and gaining market share with the right tactics.
5. Perfect your product:
Poor products/services can be a huge downfall. It’s important to consider the USPs of what you’re offering and to ensure your product ticks the necessary boxes. Take customer reviews seriously and constantly improve. Additionally, another problem for businesses is pricing. Products that don’t live up to high price tags will create a stream of complaints, particularly with today’s social media platforms where customers can interact with each other. Conduct adequate research so you can be confident your price is right!