Why do so many startup businesses fail? Well, there’s a question! We all hear the stats on how many new startup businesses fail in the first year, and by all accounts it’s only getting worse.
For years, the reasons given often skated around the real issues, and the help offered was often centred around old-fashioned jargon-based crap. The reason so many startup businesses fail is rarely because of a poor mission statement or core values, it’s hardly ever because of inaccurate five year targets, and it’s unlikely to be because of a badly written business plan.
Why do so many startup businesses fail?
Nowadays, the reasons given as to why so many startup businesses fail are much more real:
- Creating a product/service nobody wants
- Ignoring customers
- Having a poor team (or just one person spinning plates for 18 hours a day)
- Not being agile
- Focusing on creating something to impress investors rather than customers
- Wasting time having endless meetings
- Expanding/scaling too fast, too soon, too much
- Having a poor (or no) business model
- Bad leadership
- Failing to actually do what you claim your business does.
All of that matters of course, but you can still fail even if you address that stuff, and that’s because it leaves an elephant in the room … you.
The reason why so many startup businesses fail is often due to things that those nearest and dearest would never dare tell you: “Don’t even think about remortgaging the house for this business idea. No one will want a Smart connected toilet seat that reads text messages when you sit on it, and especially not from someone as irritating as you!”
It’s hard not to confuse being positive, being a go-getter, being enthusiastic, having a glass half-full attitude, etc. with the reality of who you are, but there is no room for sticking your head in the sand in business, particularly if you are spending your life-savings on that business.
Things to consider:
- Are you solving a problem that no one really cares about?
- Did you ask friends and family about your product – they said it’s fantastic, but once launched into the public arena no one is buying it? Hmm.
- Are you pig-headed and ‘it’s your way or the highway’?
- Are you shy and/or introverted and allowing that to hold you back?
- Do you not really know what you are doing, so the plan is to just throw your inheritance at the business and hope it turns out well?
- Do you simply not get it, and are getting frustrated and angry about why people don’t buy your product/service?
- In your desperation to get started, have you signed a lease on a property for a restaurant/shop that is two blocks away from the high street, hoping that people will stumble across it?
- Do you feel you don’t have a problem, and the problem is everyone else? “Those b@stards! Why are they buying from them when they should be buying from me!!”
- Are you avoiding getting stuck into selling, and just playing at it rather than sending those emails and making those calls?
- Are you keeping your business idea secret so that no one steals it?
- Do you avoid the ‘numbers’ and play dumb, blaming your accountant? If so, you need to read our Make sure you understand your business accounts article.
- Are you clueless about what to charge, so just keep lowering your prices thinking that will help?
- Have you bought expensive equipment or signed up a business/warehouse lease prematurely, and are now tied in?
- Have you taken early investment and given too much equity away, leaving nothing left to play with?
- Is your website truly awful but you stick your head in the sand, or worse, throw a load of money at it with an agency?
- Do you celebrate having about a sale, when in reality it’s nothing more than a vague lead?
- Do you secretly not even believe in yourself or your product/service?
- Have you actually got no passion or interest in your business?
- Are you embarrassed about your lack of business skills and are almost hiding yourself away?
- Do you hate negative feedback so avoid putting yourself out there?
- Are you a business know-it-all?
- Do you bang out sales letters and replies to enquiries with no manners or punctuation because you’re ‘just so busy’? If so read our How to write effective sales emails article.
- Are you fooling yourself that things are working because you get social media ‘likes’?
- Or is it purely a case of you being totally crap at business despite your best efforts!?
If you’re having specific problems with generating sales from your site, check out our Why is my website not generating sales? article, which may help.
These examples are just the tip of the iceberg, and there is a huge cross-over with all the other points mentioned in this post. However, the point is that a lot of business success or failure, comes down to the founder’s personality, their passions, the type of person they are, and their previous experience in work/life/business.
This blog post may not sound terribly supportive, but it’s that fake supportive guff, that is causing many startup businesses to fail. It’s time to get real and face the truth about the situation.
The good news is that even though the question, ‘why do so many startup businesses fail’, is a common one, there are things you can do to try and avoid being one of them. How? By being true to yourself – start a business that you’re passionate about; by getting real and facing the real problems; and by tackling the elephant in the room. If you don’t know what the problem is, ask someone who will be upfront with you. Be prepared to face some home truths. Question everything. Keep a tight rein on spending – if you’re unsure, don’t sign up or part with your money. The list goes on.