All start-ups are not runaway successes – in fact, a majority of them sink without a trace after 2 to 3 years of existence. Even when budding entrepreneurs are equipped with all the right qualities, they have to deal with layoffs, bankruptcy and faulty services/products. So if you are planning to set up a new venture, you must understand some common reasons why most start-ups fail. It will help you avoid potential problems that may come your way.
1. Thinking small
A research conducted by Harvard Business School reveals that 8 out of 10 businesses fail in the first 3 years. Most entrepreneurs try to create unique products or services that don’t cater to larger audiences. Think global, your product must solve the problems of masses and only then your business will survive in the competition.
2. Lack of funding
For any business to flourish, regular cash flow is a must. It is a blueprint that helps the business to grow and improve. Most entrepreneurs cannot afford to pay their staff. Financial problems can ruin a business. Before launching any new business, make sure that you have sufficient funds.
3. Trying to handle everything on their own
Newbie entrepreneurs, in an attempt to cut down costs try to play different roles themselves such as that of an accountant, Human Resource or Marketing Executive. This can become very stressful and may hinder the growth of your start-up. If you cannot afford to hire permanent staff, then seek services of a staffing agency and let them assist you.
4. Lack of research
Most businesses fail because entrepreneurs don’t have enough knowledge about their products, market conditions, and customer tendencies. It is very important to have insights about the market that you are getting into to build a successful business establishment.
5. Improper marketing
Marketing is the lifeline of any business. Most newbies don’t follow a proper marketing plan and simply blow up money on traditional methods of advertising that does little good to the business. You can harness the power of Internet; create forums and communities to reach out to target audiences.