6 Failure Points for Startups to Avoid

05 Apr, 2016 / Comments: Comments Off on 6 Failure Points for Startups to Avoid / By

Studies show that only half of new businesses make it through the first five years successfully. Those are some scary statistics if you are just starting out. How do you prevent yourself from becoming a part of the half that does not make it? You can start by avoiding these six failure points.

 

1.  Not Offering a Unique Opportunity

Copying what is already out there is not going to make you the “next big thing.” You need to be unique. This does not mean that you cannot capitalize on a great idea that is already out there, but you have to find a unique vantage point and run with it. This could mean taking a different approach to a service or offering something that no other competitor offers. Just copying someone that has already reached success is not going to put your name in lights.

 

2.  Not Open to Change

The very first idea you had when you began your business might not be where your business goes once you begin. If you are not flexible and willing to adapt to the needs of the market, your customers, and even your leaders, you are destined to fail. Better ideas will likely come along as you do your research, start your business, and see what is out there. If you do not roll with the punches and remain stagnant in your ideas, you will likely become a part of the 50 percent that fails.

 

3.  Doing it Alone

Even if it was you that came up with the great idea for your business, you cannot do it alone. Most successful businesses have multiple partners in the mix because they each bring unique ideas and strategies to help the business grow. If you do not have people that partner up with you and become leaders in your business, it does not show a lot of support for what you have to offer. Do people not believe in your business? That is what people might think when they realize it is a one-man show. Even if you do not want to share the profits of being an owner, at the very least, hire some quality leaders that can help your vision grow.

 

4.  Mismanaging Finances

Finances are a crucial component to start up a business, but not just to open its doors – you need plenty of capital to keep it running. If you do not properly predict the money necessary to keep going, including salary payments, utility bills, and the money to keep up your inventory, you might close your doors early. You cannot accurately predict the amount of revenue you will bring in right away, which means you need enough capital to get you through the first year or two. This gives you a comfortable cushion if your business does take off while helping you stay in operation if your business model takes slightly longer to come to fruition.

 

5.  Starting without a Plan

Even small mom and pop type businesses need a business plan. No matter how informal it is, having everything in writing helps to keep you on track. If you think just running with a great idea and having no plan in place will make you the next Donald Trump, you are mistaken. You need a plan that provides direction for the business, a mission to stick to, problems and subsequent solutions that you may encounter, an evaluation of the competition, and a plan for your finances. This plan can change as many times as you see fit, but you have to have a plan in order to make changes.

 

6.  Remaining Invisible

It is impossible today to have a business without having a website. A majority of consumers consult the internet before stepping foot out of their house and some do not even leave their house to patronize a business – they order right from the internet. You need a professional looking website with quality content and an easy to navigate design. Without one, your business simply does not exist to a majority of the consumers out there.

 

Starting a business can be scary because of the large number of factors that play a role in your success. Avoid these six common pitfalls and you are well on your way to having a startup that reaches success!

 

William Mahnic
William Mahnic is a Finance Professor at Case Western University and has spent more than 20 years in the finance industry before becoming a professor. Mahnic has appeared as a commentator on both TV and radio talk shows including NPR, Crain's Cleveland Business, WKYC 3 and The Washington Post. He has been interviewed in BusinessWeek, Wall Street Journal and The Los Angeles Times.

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