InnMind addressed to statistics to understand reasons why startups fail and how to avoid it
We are sure you have heard sad statistics that 87% startups fail. To figure out reasons why it happens we look at report of CBInsights “The top 20 reasons startups fail”. Company CBInsights processed data from more than 101 failed startups to create this scale.
You may have noticed that the sum of these numbers exceeds 100%. Because, there is no single reason why startups fail. If you fail, you normally have a few reasons.
Overconfidence helps you start a business. But overconfidence that turns into arrogance hinders to take pulse of the market. Arrogance causes failures because there is no market need, or the product is too early/late. Some teams underestimate the need of of business model, and do not address network and advisors.
Fix: Temper your overconfidence with the humility to accept criticism without becoming defensive
In your plans everything is ideal. But reality presents us changes and we should be ready to face them and persist. You need to have a foresight to determine your actions and build a strategy. So, short-sightedness leads to release product in wrong time and lack of cash.
Fix: Maintain some reserves so that you don't crash and burn the first time you hit a speed bump.
Even if your product is excellent, people cannot know much about it. So, you have to promote your product instead of waiting for clients. Hubris causes mistakes due to the fact that founders ignore customers, do not spend enough effort on marketing and are getting easily outcompeted.
Fix: Pay as much attention to hiring marketers and salespeople as you do to hiring your engineers.
This characteristic also destroys relations between people. Egotism in startup team leads to disharmony of team and in relations with investors. Continuing this situation, your startup will lose financing or investor’s interest.
Fix: You should learn to negotiate and sometimes give way to save your startup.
This characteristic will destroy your brand reputation. To become a success and have satisfied clients, entrepreneurs must be meticulous and make sure that nothing falls through the cracks.
Fix: If you tend to be a "big picture" person, partner with somebody who's detail-oriented.
Don’t forget about rest. With enthusiasm founders and tam can work 24 hours / day, but lack of work-life balance leads to your health and desire to work. You lose focus and passion, and in the end burn out.
Fix: Exercise or meditate every day, turn your phone off when you go to bed, eat healthy, etc. You know the drill; now just go ahead and do it.
Flexibility is one of the needed characters to be an entrepreneur. To stay in business you should react to changes in the market and demand of clients. Due to inflexibility, founders are not ready to pivot, and even if they are ready, very often they fail to do it in a right way.
Fix: Plan from the start that you'll need, at some point, to radically change direction. Welcome rather than resist the inevitable change when it comes.
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