The optimism and excitement surrounding a new business quickly fades when profits fail to appear. It’s a reality that a large percentage of businesses go under within the first year. They simply never gain any traction in their respective industries. There are clear reasons why startups fail. These reasons are common in every industry, which makes them important to note as you open up those doors to the buying public.
Lack of Industry Knowledge
You’ve always loved eating out at restaurants, so you bought your own franchise to build on that passion. Your love of food is certainly an important factor, but it can’t sustain your business. You must have experience and schooling in order to drive that startup into an established company.
A pitfall that many entrepreneurs fall into at this point is hiring employees. Business owners believe that the expertise found within the employees will float the company. The payroll and insurance, however, eventually bring the company down instead of pushing it upward. Business owners must focus on educating themselves and core partners before supporting an employee pool.
Consider the expertise found at ExpressBadging.com. Using the cloud to monitor and maintain employee access across a business through badging may seem like a simple startup. In reality, ExpressBadging.com’s executives and employees have years of experience that cannot be duplicated with just a little bit of research.
No Practical Applications
Fantastic ideas come up every day. They don’t all make for successful businesses, however. The old adage of “not reinventing the wheel” applies to this situation. There’s no reason to create an out-of-this-world product if it doesn’t have any practical applications. The product or service must solve a common problem in society.
The public should associate your product with some aspect of daily life. By making a useful product, it’s nearly impossible to fail as a business. Don’t get caught up in grand ideas. Look at your concept from consumers’ perspectives. Take the ego out of the idea, and be truthful about its validity in the marketplace. Being honest with your idea will save you money and frustration down the road.
Overlooking Competitive Aspects
Your idea may be innovative and distinct, which leads you to believe it’s unique in the marketplace. Reality must be part of your business model because your idea may already be duplicated in other circles. It simply hasn’t been advertised yet. Take some time to research the marketplace. Your idea may have several forms. Use this information so you can improve on the idea or let it go entirely. Lack of competitive analysis is typically a quick route to failure.
If your idea is subject to patenting laws, be sure to put in your request as soon as possible. You may be able to derail some competition by proving your idea was an original one that deserves marketplace protection.
Failure To Invest in Growth
The blame game occurs as a startup slowly breaks down. Lack of funds is typically a driving factor. It’s not just customer sales that dictate your funding opportunities, however. Being able to network with investors is critical. After opening your business, continue to look for investment opportunities. Ask for a meeting where you can pitch an idea that broadens your market outreach. Working with multiple investors keeps your financial accounts open and versatile in a changing environment. When you’re ready to expand the company, there are enough funds for you to do so. Financial limits will always be in play, but be proactive during every quarter to work with different colleagues who only enhance the business outlook.
Skipping Product-Quality Checks
Your reputation is critical in the beginning stages of any business venture. The product or service must be perfected before it hits the streets. Don’t overlook the value of quality assurance. Test your products, and keep them in-house until any defects are solved.
Sending out a poorly developed product only creates more debt for a growing startup. From recalls to damaged reputations, these negative reactions in the marketplace can spell doom for any new business. Take your time with the product so that every consumer enjoys its quality and reliability.
Take a hard look at your business’s model well before a grand opening. Think as far ahead as possible when it comes to funding, industry challenges and economic obstacles. Your startup can be one of the few that stands the test of time. It’s possible with a rational look at the world and constant changes to an evolving business model.