There are certain common startup pitfalls that have resulted in the failure of countless startups and new businesses of all sizes. Launching a startup business venture is truly a challenging endeavor that involves having a brilliant idea and taking on the hard work required to turn it into a reality.
Unfortunately, having a brilliant idea and the willingness to work is not enough to ensure the success of a startup. It takes a lot more than that to be successful in the startup world. As human beings, we are individually unique but collectively very similar. For entrepreneurs and founders, this essentially means that when faced with certain situations commonly encountered when launching a startup, we tend to react or act in a similar manner.
This is one of the key reasons that the majority of startups and new businesses fail within the first five years. New research has shown that over 12 months of 2019, the failure rate increased by 2%. To put into perspective just how hard launching a successful startup is, most ventures shut down within the first five years, even if they are funded by venture capitalists with deep pockets. Even then, just a tiny (tiny) portion of the new startups launched each year will become billion-dollar enterprises.
So, why do so many startups fail and how do founders maneuver around the most common startup pitfalls? Let’s take a look.
Lack of Strategy
The first startup pitfall to avoid is related to the strategy for your startup. Strategy runs from your overall vision to day-to-day management of your operations. Without a clear strategic vision and operational strategy, many founders immediately find themselves in trouble in terms of manpower, poorly-executed marketing and social media presence, and lack of cash flow, to name a few.
To avoid this startup pitfall, it is critical to examine your strategic vision and operational processes and dissect them carefully so that you are able to determine which lack structure and need revamping. When locating these weak points and developing your strategy, you may need to consider going back to the drawing board to create more systematic protocols and procedures that ensure optimal operations.
Lack of Planning
Another common startup pitfall to avoid is lack of planning on how to execute your business initiatives. There are many causes to this such as poor research and marketing as well as not enough beta testing to identify which demographic your product/service could potentially thrive in.
Without proper planning, many founders continually find themselves in a reactive mode rather than a proactive one. When you are always forced to react to situations because of a lack of planning, it inhibits your ability to be nimble, adapt readily and take appropriate action. When practicing proper planning, founders are able to react and adapt to immediate challenges. Proper planning can also help you have a “Plan B” on standby should “Plan A” not work out as hoped. The lesson to be learned by this startup pitfall is to always plan a few steps ahead.
Lack of Niche
Another common startup pitfall to maneuver around is lack of niche. For many startups, this typically means that the product or service is trying to be too many things to too many people. When your startup is unable to identify its core competitive advantages that set it apart from its competitors, trouble is usually on the horizon. If you are unable to identify your niche in your marketplace, you will fail in the long run because your competitors will have a clearly defined niche and competitive advantage.
Keep in mind that remaining competitive in any marketplace requires continuous adapting and updating your strategies and tactics to truly stand out. It also allows you to keep tabs on all trends and activities going on in your industry so that you know which of your current strategies and tactics to use and which to discontinue. This open-mindedness and willingness will work out in the long run as you will be able to easily adapt to any and all obstacles that come your way.
This is clearly not an exhaustive list of all the common startup pitfalls that can put a new venture on a pathway toward failure, but it does cover three of the most common ones.
If you are a new or beginning founder, one of the best ways to avoid the most common startup pitfalls is to seek guidance from more experienced, successful founders. You can also look at joining a structured program such as a startup accelerator to help guide you toward success. Accelerators such as Founder Institute and others, provide the structure, guidance, discipline and mentorship a founder needs to avoid the most common startup pitfalls.
Want to talk more about startup pitfalls? Contact me today and let’s talk!
