Why So Many Startups Fail – And How To Avoid The Pitfalls

As we enter a new year more and more startups will join the ring, each competing for success in an increasingly convoluted industry. Statistics on startup success make for a concerning read. Where it was once previously claimed that 8 in 10 new companies would fail, in 2015 this figure rose to just 90%.

As the chance of survival slims, analysts also warn of the dangers of a 2016 global recession. The U.S. economic recovery has been in general strong, with slowing declining unemployment rates, and a strengthening dollar. However, a fast expansion, fueled with large cash injections could soon begin to wobble.

In the U.S. 99.7% of all business are small, roughly half the world’s workforce works for small business, and almost two thirds of new jobs come from these businesses, according to a recent report from Sage. It has also been estimated that almost 140,000 startups are created every day.

Transforming the initial startup solution into a feasible business is not easy. Planning business growth based on market demands that guarantee longevity is paramount.

Entrepreneurs that choose this time to launch a new business, are by nature fearless. However a few tips from the founders that have stumbled, fallen and succeeded are essential reading for those daring to enter the jungle. Four startup founders share their advice.

Create A Business, Not A Startup

“The truth is that most startups aren’t built to be sustainable businesses. There’s a substantial difference between the initial stage of startups, identifying a problem and coming up with a solution to that problem, to the second phase of development. That stage entails recruit, training, planning, and timely execution, within a set budget, backed by a monetization plan to allow a business to grow and expand organically (or at least become attractive enough to raise more funds).

Although this second phase requires less creativity and entrepreneurship than the initial stage, this is where most startups fail due to lack of experience, lack of skills, or insufficient funding.” – Alon Rajic, Finofin LTD

Promote An Identifiable Culture

“I believe that most startups fails because the founders weren’t managing their expectations. In other words founders sometimes create alternative realities and avoid asking the right questions as they don’t want to face their realities. Our company avoided this by promoting a culture without egos.” –  Ali Benmoussa, Searchub

Play The Long-Game

“A startup needs to be committed to the long-game! It’s true that “quick success” is a rarity. Too often we expect a quick turn around. In Savvi, we like to celebrate the “wins”, but realize that many more are needed to move forward. Keep your head out of the clouds and keep pushing ahead.” – Brodie Kalamen, Savvi Solutions Inc.

Don’t Put All Your Eggs In One Basket

“Most tech startups are centered on a single product or service. The tech industry can change overnight, making hyper-focus a risk. By offering an array of tech solutions for the home, we’ve been able to pivot and grow through the industry’s hiccups and changes.” – Jordan Wills, Cloud9 Smart home