From lack of product-market fit to disharmony on the team, CBInsights has broken down the top 20 reasons for startup failure.
Top 20 Reasons For Startup Failure
- Building a solution looking for a problem, i.e., not targeting a “market need”
- Ran out of cash
- Not the right team
- Get outcompeted
- Pricing/Cost Issues
- A “User Un-Friendly” Product
- I got this product. Now I just need a business model
- Poor Marketing
- Being inflexible and not actively seeking for using customer feedback
- Release product at the wrong time
- Lose Focus
- Disharmony with Investors/Co-founders
- Pivot Gone Bad
- Lack Passion and Domain Expertise
- Location, Location, Location
- No Financing or Interested Investors
- Legal Challenges
- Do not use your connections or network
- Burn Out
- Failure to pivot when necessary
Business failures are costly
They can result in lost capital, wasted time, and damaged confidence. Some of the challenges uncovered by the CB Insights study will be hard to predict — such as timing, whether you’ve hired the right people, and if you’ll make necessary pivots after launching the business. Don´t fly blind and better check your readiness to start and grow a new business.
Strategies, we use to pre-validate demand for a product or service
Look for successful competitors.
When it comes to establishing demand, thriving competitors are a good sign, not the red flag many entrepreneurs view them to be. Being the first mover in a space can produce situational advantages, but showing up late gives you the benefit of added perspective.
Check for search traffic.
When people are searching for a product to solve a problem they’re facing, they type what they’re looking for into Google. Through keyword research, entrepreneurs can learn what people are searching for and use the findings to gauge demand for a product or service idea. Confirming that people are searching for a product or service like yours is a good sign, and through Google AdWords campaigns or SEO, you can work to get in front of these very people if you decide to launch the idea.
Test your marketing promise.
Generally speaking, customers don’t truly know what it’s like to own a product until after they’ve purchased it. They don’t spend money because of any realized benefits. They’re paying for the benefits promised in the sales copy and testimonials. This is a crucial insight for anyone looking to test a new product or service because it suggests that you don’t need a finished product to validate demand for an idea. You can create the marketing copy for your hypothetical offering and test it through surveys or interviews with targeted prospects.
Challenge your clarity of objectives and your briefing
It seems self-evident that the most important part of a brief is a clear description of what the aim of the brief is. Yet, this is consistently the weakest area of written briefs. It is often confused with overall business, brand or marketing objectives, whereas the single most important content section is the communication objective itself. Some briefs simply describe the sales target without any thought as to the role of communications.
Your briefing is key to success
The format should reflect the company’s beliefs about how communications work and therefore what is important enough to be included in the brief.
- Where are we now?
- Where do we want to be?
- What are we doing to get there?
- Who do we need to talk to?
- How will we know when we have arrived?
Read further and find a briefing template.