The 5 most common reasons why start up businesses fail. Coming up with a genius idea for your start up business is usually the easiest step. Keeping the businesses afloat after setting it up however can be tedious. If not done properly, a business will fail dismally from the onset.
Good founders and good entrepreneurs must be very good in risk mitigation, or they might just fall for 6 of the most common reasons why startups fail. Below is a list of the 6 possible reasons why start up businesses fail;
1. Inability to raise capital
Entrepreneurs may always be surprised by the time and number of rejections required before they succeed in raising capital for their startup. Too often this process is started too late however fundraising in a startup environment is something that needs at least 6 months of active interaction with potential investors. The more you are in the routine of fundraising, the more precise you are about what you need as a company and what investors who are looking for your profile want.
2. Poor marketing
Noise matters and no matter how great your product may be, itit will sink if it lacks proper marketing.. Poorly managed marketing (or sales) is a major reason for the failure of many startups. You don’t always need a professional PR team at the beginning, but you need to create buzz in social media and in the press about your company and products.If your company cannot manage marketing properly, no one will know about your product, therefore no one will buy it.
3. No market demand for your product
Too often in the startup scene is that a number of companies believe their invention is so appealing that the market will beg for it and money will begin to flow in. A lot of entrepreneurs fail to understand that a product could be rejected in the market if its not needed. Validating their product in pilot projects before launching, or even beta-testing instead, those entrepreneurs might reduce significantly their failure and market rejection risk
4. Lack of skills needed for the business
Your skills as an entrepreneur must be complemented with the ones of your team. Always have someone good at sales, someone good at management and bookkeeping, someone good at marketing and someone good at product development. If you or your partners lack the skills or abilities needed to get your company going, be sure to identify those needs early and learn and experience theoretical and practical knowledge that can give you the upper hand against your competitors and prevent your company from crashing.
5. Weak team, poor leadership
At any stage, a good leader has the charisma and track record to inspire a compelling vision for the company and its future, recruiting committed employees instead of top talent who will fly to the next offer very soon. Employees committed with the company mission and vision will help the entrepreneur realize their vision faster and yield profitable results.