People involved with startups are brimming with excitement because that environment of entrepreneurship gives them an environment to pursue their dreams with the support of like-minded professionals. Remember: one great idea could turn the bustling startup into the next big thing. That potential must be nurtured and incubated.
There is a notion that startups need to be agile. They need to act fast. They need to fail fast, too, so they can begin anew with a better mindset and collection of data.
This article is going to highlight five of those common failures you’ll find within the startup culture. Learn from them, when launching your startup, and you could juke past the troubles and keep the engines running all the way to success.
Problem #1: Not Knowing Your Brand
Startups are exciting because you invariably partner with a few like-minded people and set off on a big adventure. The only issue is that many individuals and groups get so wrapped up in diving head first into the projects that they don’t take the time to think of their brand identity. They fail to identify how they’re going to stand out in the industry, nor how they’re going to be remembered (and identified) with their community and customers.
Things to consider are:
- What truly defines you as a brand?
- What makes your startup different from the others?
- What value do you bring that others cannot?
- What experience does your product/service offer individuals?
- What impact will you have on your community and industry?
Consider all aspects of what’s going into your branding from designing a great, recognizable logo to the “voice” it has on your community and customer. Aim to make something memorable from the start because it’s going to be quite difficult to change the brand once things are rolling.
Problem #2: Not Knowing Your Customer
You’ve completed the legal requirements, you’ve developed a prototype, you’ve built the site, and you’re ready to go. You launch. Time ticks by. You see a trickle of sales but not like you had imagined. One potential problem (and failure) on the part of your startup? You missed the mark when it comes to identifying and understanding the market and your customers.
Ask these important questions:
- Do I have an understanding of my customer avatar?
- What platforms do they frequent so I can reach them proficiently?
- What competitors do they go to when they’re in need of the product/service I offer?
- Who are the early adopters and brand ambassadors that can help me spread the message?
It’s vital that you take the time to do research on your potential customers. Once you understand who they are you can then align your marketing and promotional efforts toward those exact individuals. By doing so you’ll cut down on expenses that would have been lost to disinterested parties all-the-while nailing it in terms of conveying the right message to the people that want to receive said message.
Problem #3: Not Knowing Your Income Strategy
Many startups charge ahead without really thinking how they’re going to make a profit. They try to ride this idea to push a free product/service and then either hopefully get people to pay for the premium version or get bought out by a bigger company. The issue is that it’s happening everywhere and people jump shit when they see something cooler.
Do you know:
- What price points are you going to offer your product or service?
- Do you have any horizontal or vertical ventures that could be explored?
- What is the customer acquisition cost?
- Will you eventually sell to a bigger company and if so then how will it come about?
At least try to develop a product or service before you launch and have a strategy for its growth. Don’t try to ride the free train forever. Sure it has worked for some in the past but it’s a very dangerous route to go especially with so much competition out there. Plan for profitability from the get-go.
Problem #4: Not Knowing Your Finances
Finances become troublesome throughout the entire lifeline of the startup. There are issues with obtaining money when setting out on the project, problems when things begin to pick up pace, and problems once you’ve found your footing.
There are a couple of ways to handle these financial troubles:
- You could bootstrap the initial launch of your startup using your personal funds and by employing strategies which require very little financial investment (such as choosing campaigns on social media versus major ad buys in big publications).
- You could consider small business loans, which give you the initial capital to produce your product/service, hire the necessary individuals for implementation, and begin running marketing campaigns to build momentum in your launch and growth.
- You could vet funding from venture capitalists within your area (or from afar), which will provide you with the much needed funds though handing over a portion of control to the individual(s), depending on the agreement.
The big thing is simply knowing and understanding your finances. You can have a great idea, a great team, and a great community but without the funding your project may never reach its tipping point within the industry to which it slinks back into obscurity and inevitable failure.
Problem #5: Not Knowing When/How to Scale
What happens if your startup suddenly becomes popular and you’re now receiving 1000x the number of requests, contacts, and purchases than last week? You’re going to be flooded and this can actually kill a business. You won’t able to handle the growth which, in turn, disgruntles those adopters and might make it so they become vocal (negatively) about the slow response from your company.
- Do your research about logistics for your business so you’re not stuck with a stockpile of product that can’t leave the building.
- Seek professionals that specialize in growth strategies whom can help you scale manageably rather than sporadically.
- Be ready to take on additional aid through the form of new hires, outsourcing, virtual assistants, or through automation.
- Understand when not to scale your efforts to prevent financial mishaps due to ill-informed decisions on marketing and promotion (which can eat heavily into budgets).
Explosive growth is exciting but can be dangerous. Dynamic growth is slow but steady. Find a medium between the two and your startup will find its place as a dominant player in your marketplace at the right time.
Have you experience at a startup? What common failures did you see take place that interrupted its grow and success? Share your thoughts and experience with a comment.
Featured image credit: Multiethnic People with Startup Business Talking in a Cafe/ShutterStock