Have you got a startup company or you are about to open one? It is not so easy as it used to be. Just having a good idea simply doesn’t cut it anymore.
It might sound unbelievable but for every 400,000 startups that open, 470,000 close per year. There are many reasons for this. Instead of trying to find expert business council, owners just push forward and end up closing their doors.
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1. Lack of funding
So, you have an idea and you are about to launch your startup. You have probably went to a bank and asked for a loan and unless you are lucky, or not new to the business world, got turned down. Why?
It is simple – people who you are asking money from are not interested in ideas. They are interested in analyses, numbers and business plans. Before even asking for a loan from a bank (or angel investors or any other government institution that offers financial aid) you should have a solid business plan with the clear picture of where you are, where you want to be and how you are planning to get there, as well as a really well-written elevator pitch. Nobody will finance a flimsy “But my idea is brilliant’. Would you give money to a stranger on that basis? We don’t think so.
Also, you will have to put in an additional effort to secure your funding, reach out to potential angel investors or find someone who can help you with a business loan. Not an easy task, but it will pay off in the end.
2. Uncharted territory
In order to make a bulletproof business plan, you first need to do a proper market research. This basically means that you cannot afford to rely solely on published data. All this will help you better understand your customers, meet their needs and consequently sell your product. You cannot assume that everyone will love it and use it no matter who they are.
The right way to go about this is to have a clear idea of who is using your product – their age, occupation, etc. Then you need to think about the question you would ask in the research process and how you are going to collect the information (interviews, survey, etc.). Then, after having collected the information, you need to analyze it, find what you can apply to your particular product and decide on you next course of action.
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3. Bad marketing strategy
It is equally unwise to assume that a certain marketing strategy can apply to all markets and customers. This is a sure way to crash and burn.
Have you ever received a mail advertising a product you were not interested in? Have you even read it before throwing it in the trash? This is because a certain business included you on their mailing list without even knowing who you were and what your needs were.
The same applies to other marketing methods such as TV or newspaper advertisements. These simply won’t be enough to attract the younger generation who prefer social media platforms. Your marketing campaign needs to be aligned with where your potential customers hang out and delivered in a language your customers are familiar with. So, no more ‘one ring to rule them all’. Rather, you should go for a marketing approach tailored to fit your target audience.
Finding an influencer in your niche who will, without a doubt, have a good grasp on what your potential customers need or are ready to pay for is a good way to go. In addition to this, do not neglect your own social media accounts – they are free and if you invest some time in developing appealing content, customers will come to you.
4. Organizational issues
There are numerous start-ups that have failed because of lack of leadership or poor organizational structure.
Just because you are the boss does not mean that you can kick back and let your employees do everything. You are a startup after all, and as such, you will need to put your back into providing work and delegating responsibilities.
This is one of the things that need to be address – even though your staff is not numerous, everyone should have a clear idea of what they do (task ownership) and who they report to. One of the most common problems is the fact that people have different responsibilities and often do not know who to address when they have an issue. There should be a hierarchy established and some procedures written down so that everyone can have a clear picture of where they are standing.
A lot of startups open every year; even more, start-ups fail. Do everything in your power not to be amongst the latter.
Nate Vickery is a business consultant mostly focused on streamlining SMB and startup management process. He is also the executive editor at Bizzmark Blog.