If you’ve recently launched your startup business or have plans on doing so in the near future, you’re probably eager to reach your desired level of success. Although it can take some entrepreneurs a significant amount of time to grow their businesses, it doesn’t have to be that way for everyone. Startup businesses can ramp up sales and revenue pretty quickly. There are a number of ways you can increase the chances of your startup business becoming profitable in just a few short years. Firstly, it’s important to know why most startup businesses fail. Secondly, it’s important to know how other startup businesses succeed and how you can do what they do to increase your chances of success.
Why Startup Businesses Fail and Succeed
At least 90% of startups fail. It’s a profound fact that no aspiring entrepreneur should ignore. The more you learn about failing and succeeding in business before you start, the more knowledge you can apply when you do start (so you can get it right the first time). My goal is to educate you so you can accelerate the growth of your startup business and avoid wasting precious time. Here are a few reasons why your startup business may fail or succeed:
- No one wants (or needs) what you’re selling – Before your launch a startup business, you have to be sure there is a market for what you’re selling. According to an article by Fortune, the top reason a startup business fails is because it offered a product or service that no one needed or wanted. You may have a great product or service idea but if no one has a need (or desire) to have it, you won’t make a penny. You don’t have to create a unique product or service to get people to buy it. You can offer an existing product or service in a unique way and capture significant market share. If you want your startup business to succeed, research your desired industry before you make any final decisions. Sites like IBISWorld and FirstResearch provide great industry reports that will give you an idea of whether or not your proposed startup business can be profitable.
- Straight out of funds – Lack of capital is another major reason why startup businesses fail. A survey of business owners, reported in an article by Fortune, found that this was the second highest reason for startup business failure after “no market need.” According to Gallup, most startup business owners fund their business with their personal savings. However, the second most popular way to fund a startup business is debt financing. I actually suggest that startup entrepreneurs save their personal funds and start with debt or equity financing if possible. Starting with debt or equity financing takes some of the risk off of you. You’re able preserve your personal funds if you start with debt or equity.
Contrary to popular belief a startup business owner can get debt financing. Unsecured business lines of credit and microloans are the most accessible types of debt financing for startup business owners. If you decide to go the debt financing route, you’ll likely be able to get an unsecured business line of credit or microloan if you can meet the credit score requirements.
The risk of running out of capital is also why it’s so important to understand your industry before your launch a startup business. Proper planning will help you understand if the business will have a customer base and how much money you will need to spend to get customers and operate the business. You have a better chance of not running out of capital if your startup business has a customer base and you spend the money you borrow wisely.
- You try to do it all alone or your team just sucks – Trying to do everything yourself is the quickest way to fail. Your chances of failure are the same even if you have a team. Incompetence is a big reason why startup businesses fail. Poor leadership can be prevented if everyone truly understands the business industry, how the company should operate, and works to together to make sure things get done right. Your team has to be fully invested in the growth and success of the startup business. Effective communication is required and time spent developing the business has to be productive. If there is one person who doesn’t communicate well, isn’t fully invested in the growth of the business, or isn’t productive, your chances of failure skyrocket. Get rid of all dead weight as quickly as possible (and do it legally).
Accelerated Startup Business Growth is Possible
The bottom line is, the success or failure of any business isn’t guaranteed. No matter what you do, the chance of failure will always be there. However, if you educate yourself and properly prepare before you launch your startup business, chances of success can increase and growth can be accelerated. The success and fast growth of your startup business all depends on execution. Make sure your startup business idea is scalable and has a market (by conducting industry research), figure out how much money you’ll need, how it will be used and where you’ll get it, and lastly build the right team. All of this is easier said than done but it’s more than possible.