There were 665,495 start-ups founded between the years of 2019 and 2020 which is more than one per minute.
According to Google Trends, ‘how to start a business’ has consistently been a popular search over the last year;
But we also know that 57.6% of startups which started in 2013 weren’t in existence 5 years later and that 20% of startups will close their doors within 12 months.
So Why do Startup Businesses Fail?
It’s a biggie and it’s the most common reason why startups falter and ultimately crash. Not being able to raise the funds to keep running or not having key investors interested means running on fumes which is never sustainable.
A staggering 29% of startups fail because of money, or rather lack thereof. Learn more about how startup funding works here.
For your startup to thrive there has to be a reliable demand because without that there is no need for supply.
Let’s say you wanted to launch a startup that offered a music streaming service. You’re up against established companies like Spotify, Apple, Deezer, and more. Without something that really sets you apart, you will probably find yourself lacking an interested customer base.
Competition matters especially if you are breaking into a saturated market. Think of all the meal box companies that have popped up in the last 6 months. There are now so many meal subscription services such as KBK, Gousto, Mindful Chef, Green Chef, The Good Prep, Simply Cook, allplants, Abel & Cole, HelloFresh, Riverford, Pasta Evangelists, The Key to Food, Detox Kitchen, and more. Without offering something totally fresh and new, the competition will be sure to drown you.
Lack of Research
If you don’t know who your target audience is then it’s almost guaranteed that you won’t be able to meet their needs. Without customer research, your business plan will most certainly fall at the first hurdle. In-depth customer research is often the difference.
The Wrong Expertise
A startup is exciting, fast-paced, and intense because it’s trying to lift off the ground, gain wind beneath its wings and take flight. If you don’t have the expertise to pilot your startup. You might have decades of experience in a particular industry but without the optimum expertise, you may not have the know-how to keep your startup on course.
The Wrong People
The culture you create is sustained by the people you hire to build your startup up towards all your loftiest goals. Choosing people who don’t align with the values established for the desired culture means that your time, and often money, will be designated to human resources as opposed to scaling your startup.
How to Set Your Startup up for Success?
The ingredients for a successful startup include a variety of things such as dedication and sacrifice. But what else can you do to ensure your startup thrives?
Customer research should be one of the very first steps you take when you are envisioning your startup. The more knowledgeable you are about your potential customers, the higher the chances of your startup’s success.
Set goals that are specific, measurable, attainable, relevant, and time-based. The clearer you are in your direction, the easier it is to take steps to get there. Signpost your journey, be clear on the pathways – if route A doesn’t get you there, do you have route B as an option?
Goals matter across all businesses but in startups, it is more than just being important, it is essential for growth, accountability, and excelling rather than struggling to survive.
Starting a business puts a lot of pressure on the head of it all. You are driving the whole thing whilst checking the mirrors, watching the competition, avoiding collisions, and keeping the team going. Your passion is the ultimate fuel which is why it is such a critical element of startup success.
You basically have to want to live through your startup particularly as you overtake others in the industry and push to scale effectively.
The Right People
The right people will help grow your business, scale efficiently and be an integral part of your ROI overall. To attract the right people, you need to work on your overall startup culture.
The aim is to create an environment where transparency, valuing experience, and effective communication are entirely organic.
Your competitive advantage is what will keep you in the elite few startups that grow rather than fail in the first five years. Developing a marketing strategy for your startup is a great way to begin. This is where you will gain insights into problems, unique selling points, market research, competitors, positioning, and more.
London is the most popular home for ambitious startups with 1.1 million fighting for success. With 20% failing in the first 12 months and 60% going under within three years, it’s understandably a cutthroat market.
We know why startups fail and what can be done to succeed. Basically, put people first at every stage. Whether you are doing research for your business plan, hiring or building your customer base. The answer at all moments of crisis is with the people.
If you are ready to pull ahead of the competition, make sure to choose the people who know startups.