- Headlines from Forbes.com, Medium.com, and Yahoo Finance tell that 90% of startups fail.
- According to a 2018 CB Insights analysis, there are a lot of reasons why startups fail, including lack of customers, funds, people, good marketing, and proper delegation of tasks.
- Successful entrepreneurs, Mark Mijares, Bryan Baladad, and Christopher Star share valuable business tips on how startups can stay afloat in the first few years of business.
- Common Ground is a great coworking space for startups to grow and learn.
There’s no honeymoon stage in business.
In fact, the first few years is all about survival. From surviving tight cash flow to implementing sound business strategies, there are a lot of challenges to be solved and key decisions to be made that can make or break a business at this crucial startup phase. It’s a common notion, and seems to have become a rule of thumb, that 90% of startups fail during this phase. This stat has headlined contents from Forbes.com, Medium.com, and Yahoo Finance.
Before you panic and become disheartened, know that you have a chance. Your business could still make it to the first three to five years of survival mode. Mark Mijares, Bryan Baladad, and Christopher Star, three successful entrepreneurs, have shared business tips on how to handle and solve some of the top reasons why startups fail based on the 2018 CB Insights analysis.
Reasons Why Startups Fail
42% of Startups Have No “REAL” Market Need
Startups fail because they don’t have customers for their products or services, or they are not solving a market problem.
Bryan says: “Look for gaps in the market. Instead of just copying what other entrepreneurs are already doing, try to find a gap in your chosen industry that is either unserved, underserved, or has too many unsatisfied customers.”
Christopher says: “The biggest mistake is when entrepreneurs do not know their customers too well. They tend to focus on asking more about which social media platform to use, or how to do influencer marketing without fully-understanding who their customers are and their pain points. If you know your customers more than your competitors do, then you have already won half the battle. Don’t obsess on what your competitors are doing, and instead obsess on what your customers want. Your competitors don’t pay the bills, your customers do.”
29% of Startups Ran Out of Cash
Startups need to work around limited resources. Mismanagement of finances and not cutting down expenses can cut short a startup business’s life.
Mark says: “Be on the lookout for great deals. You don’t always have to purchase brand new items or equipment.”
Bryan says: “Study your expenses very well. Make sure that every single cost (even hidden cost) is accounted for.”
23% of Startups Don’t Have the Right Team
Recruiting the wrong person, as well as hiring too many, too little, or too late can all lead to possible startup post-mortem.
Bryan says: “You know you hired the right people when they become proactive and act like they also own the business. It makes me happy when I see my employees suggest ways on how to improve processes in the company. This means they have developed real care for the business.”
14% of Startups Have Poor Marketing
The inability to get the target market’s attention and convert them to leads are common causes of failure among startups.
Mark says: “Word-of-mouth is and always will be the best tool in marketing. I got my first client just from a friend’s recommendation!”
Bryan says: “Take advantage of social media. It’s easier to reach your customers through social media and digital platforms.”
8% of Startups Get Burned Out during their Starting Years
It’s not only time that needs to be managed. It’s energy, lack of sleep, not having a sense of work-life balance, inability to delegate tasks, as well as micromanagement, can be demanding to a business owner, ultimately causing a startup to fail.
Bryan says: “Make use of your people’s whole potential. I train my employees in such a way that they don’t wait for my orders. I give them a certain degree of freedom in deciding and choosing what’s best for the company within their circle of responsibility. I just provide them with guidelines in decision-making and the overall strategic direction of the company.”
Christopher says: “You need to allow your team to own up to their work. Do not control your team, but instead give them proper context so they can make informed decisions.”
Where else can you learn?
Even when you take all the right business tips and study all the theoretical books in business, there will still be times you’re going to feel unsure and have moments of close calls. As not all startups are the same, you need to create your own business tips based on your own experience.
Learn from others.
Christopher says: “If I could advise my younger self, I would encourage him to meet other entrepreneurs and get stories and insights that you’ll never learn anywhere. You will not only save a lot of time, but you will save yourself from committing a lot of costly mistakes, too.”
Learn from experience.
Bryan says: “Just do it. Stop over analyzing. Business is best learned by experience, not by books.”
Learn from mistakes.
Mark says: “I believe failures are essential and inevitable. These failures will help you grow should you choose to face it and stand up once more.”
Common Ground is a great coworking space for startups to grow and learn.
All great things start small. Startups need all the support they can get—in a big way. With Common Ground, startup businesses can take advantage of business-class equipment and technology, have the opportunity to work with and learn from other companies and professionals, and get business support services such as accounting and recruitment.
At Common Ground, you can readily apply these business tips, so your startup can make the cut:
- Learn your market. Be exposed to possible clients and learn the gaps and opportunities in the industry from other businesses.
- Cut expenses. Get flexible, straightforward membership plans that are within your budget, and includes member benefits and exclusive privileges.
- Find the right people. Get help with the hiring process and get to know professionals that can be part of your team.
- Have the chance to market your product. Let the community know all about your company and the great product you offer.
- Work stress-free. Be able to work in a vibrant, well-designed office that encourages fun at work and work-life balance.
Book a tour to visit and learn more about any of our coworking space situated within Metro Manila’s prime business locations. The first few years of your business can mean survival of the fittest, but Common Ground can show you how your startup can totally slay!