The number of startups failing each year is countless, but the reasons for their failure are just limited. The first time founders and entrepreneurs are so passionate and have so many ideas to execute, but still, they fail.
This is, unfortunately, more or less the case with so many freshers in the business and startup world. Almost all of them who fail to make the same mistakes and fall prey to the same traps.
Here is a graph demonstrating the top 20 reasons for startups’ failure as has been studied through a survey by CB Insights.
While there may be various reasons for the newbie startup managers being so naive, the main focus shouldn’t be those reasons. Instead, there must be enough coaching and consciousness about those lethal mistakes that can get a startup’s tombstone displayed soon after its birth.
Once there is more than enough talk about the mistakes to be avoided, the newbies’ success rate in the market will surely increase effectively.
Here are some of the most common factors that have been continuously leading to the startups’ failure over the years.
Mistakes Startups Should Avoid At An Early Stage
- Spending Too Much Unnecessarily
Approximately 29% of the early startups couldn’t solve the intricate conundrum of managing finances and time properly as have been demonstrated by a study.
This highlights the importance of letting the beginners know about the importance of the mistakes they make while investing their money.
It is necessary to have enough in your bank that you can easily be supported by your own self in the times of dire need. You earn more than that you expected in the first few months of your startup doesn’t require you to shift to a lavish office and invest in fancy decor.
Always try to save as much as you can and refrain from acting as an office worker in the first 10 days of the month.
- Acting Out All The Advice You Get
Typically starting a business is something that cannot be hidden from anyone. Your friends know of it, your neighbors do, your far fledged relatives do, and who doesn’t.
Related Article: 7 Tips For Startup Founders To Cope With Failure
I have observed that once you start doing something, everyone will act like they are the boss of your field even when they don’t know coins about it.
Your uncle, who spent all his life working in a shop, will tell you how to manage sales and marketing. It is a Shakespearean situation of “mere prattle without practice”, but you have to stay above it all.
You will get a lot of advice, but you don’t have to act out on all of them. Just consider those granted by professionals of your field and discard even those too if they don’t suit your needs.
- Making a Lot of Haste
Probably, the old saying of “haste makes waste” was specifically made famous for the startup newbies by nature. Let us be real, it is really enthralling to do everything you have dreamt of in the first few months of your startup, but it turned out to be the biggest folly of many who have failed.
Always make sure to move with a moderate pace, doing things one by one. Keep in mind how Matt Rogers, the co-founder of NEST, advised about taking one step at a time and celebrating the most insignificant achievements on your way too.
- Not Being Flexible
Most of the new startup head are stubborn and lack agility towards changing their minds and plans. They are either too sure about their plans’ success or just get numb after any of their ideas fails.
This shouldn’t be the attitude of someone who wants their startup to succeed. Being flexible with your actions and plans must be on the top of your list while designing the attributes of a successful entrepreneur.
- Insufficiently Stocking the Inventory
Many newbies become the “Ebenezer Scrooge” of “A Christmas Carol” while filling their inventories. They think that the import process’s pace is fine enough not to let them run out of stock, but they are almost always wrong.
I have seen so many startups fail because the orders were plenty, and the inventory stocks were not enough. What if there arises some issue with the import process and the stock ends before you have fulfilled the orders? Always try to keep your inventories filled enough to fulfil all the orders you have in line.
In case, you see that the stock is running out, close the orders for some time. Not being available is, at least, better than confirming the orders and not fulfilling them in time.
- Not Paying Any Heed to The Feedback
Customers’ feedback is the most effective channel through which you can enhance your services and products and ensure your startups’ sustainability.
Many startups which fail despite being committed to their purpose and working hard are usually not providing what people want to form them. Most of the newbies are also seen to be contemptuous enough to not take any sort of criticism constructively.
It is very important to listen to what people want from you and what they don’t like about you. Otherwise, your failure is inevitable.
- Trying to Be The Jack of All Trades
…. and master of none. To my surprise, there is not enough awareness about how fatal it is for a startup to be micromanaged. You cannot manage everything all alone.
Even when your idea is solely your own and the plan your executed was in isolation, you need to have separate people for separate things to run the business processes smoothly.
It is obvious that a new startup runner would love to do all that costs him the lowest, but it is not a wise thing to do all the time. You must hire people for different things to be done under your supervision so as to get things done faster and in a stress-free way.
- Hiring Too Early or Too Late
Once your new setup has reached some concrete form, it is folly not to hire people and wait for a miracle to happen all at your hands.
On the contrary, it is also not so wise to start hiring soon after an idea comes to your mind. Try to be very critical in your timing of when to start hiring people for your business to avoid failure.
- Avoiding Official Contracts
No matter whether it is your best pal you are working with or the neighbor you have trusted for so long when it comes, it business be professional. Make sure you document everything and try to sign contracts so as to be officially aware of the T&Cs and everything.
Do not fear the anger of your friend of the family while you ask them to sign legal contracts with you, in fact, fear not doing so to avoid failure.
- Putting Yourself All Aside
Remember your dream is big and needs you to put in the effort, but even important than that are your health and mental peace.
Putting yourself aside or not paying attention to your loved ones and your own health just for the sake of work is not a wise thing to do. You have to maintain a work-life balance and ensure both your health and mental well-being.
In fact, it can give rise to many other issues that will distract you from work even more and can bring failure to your doors.
- Not Taking Even a Single Risk
Without risking something, you won’t be able to achieve anything. Do not fear too much in your early startup days.
Try being a little fearless and take risks. If it all goes well, great. If it doesn’t, at least you got some experience and life long lesson.
Remember, making your new startup stand strong and unshaken is not easy. If you are really into growing your business and succeed, you need to stay up to date other than working hard and staying focused.
Lastly, it is very important to stay true to your own self. Be loyal and work as hard as you can, and you will surely succeed.