How many startups fail?
It’s a hard and bleak truth that nine out of ten startups fail.
Startups failing is not a new phenomenon. Numerous studies have been the subject of how and why startups fail. Most studies indicate, that the number one reason for startup failure is: there was no need for the product or service. Making a better product that no one needs is a sure shot way to kill a startup. Interestingly enough, 3 out of the top 5 reasons have to do with financial aspects: running out of money, the competition was quicker or more efficient, and pricing and cost issues. Sentient Solutions is a financial consultancy
What are the characteristics of startups that succeed?
For a successful startup, many things have to go just right. Some of the major trends and
- The Product is perfect for the market
If your company is not customer-centric it is doomed for
faliure . – Arslan Rafique
The reason why startups may fail is that they make products that no one wants. Therefore the single biggest reason for the failure is due to the lack of a market need for the product. Hence, time should be spent on making sure that the product or service being made is the right product for the right market.
- The entrepreneur doesn’t ignore anything.
A good product idea and a strong technical team don’t give any guarantee of a sustainable business. The business process and issues of a company shouldn’t be ignored. The key to addressing problems early on is transparency. Clean and clear lines of communication streamline the company’s efficiency. It should be kept in mind that the roles and responsibilities will overlap. Therefore, during the startup phase, the team members can’t segment their responsibilities. They should work together on their business.
- The company grows fast.
Entrepreneurs crave for fast growth. Fast growth in the market is a sign of a great idea. It is a sign of future success if rapid growth takes place at an early stage because growth leads to more growth. As a rule of thumb, if by a certain amount of time the growth doesn’t happen, the growth will eventually not happen.
A company which doesn’t grow ends up shrinking.
- The team knows how to recover
The more versatile the team is the better chance it has on succeeding. In the startup environment, versatility involves a person’s skillset and mindset. A startup team should have the ability to change products, adjust to different compensation plans, take up a new marketing approach, shift industries, rebrand the business, or start the business all over again.
A team that is able to recover together has the trait to work together through tough times.
Startups which have co-founders have a higher success rate than those companies which have a single founder. Cofounder creates a partnership which means there will be more accountability to help avoid the pitfalls of a single charismatic leader.
Conclusion
The key reasons startups succeed is that their product or service fulfills a need, they don’t ignore things, they grow fast, and they work around
