We are in an era of ‘disruption’. A time when startups worldwide are growing in numbers and are disrupting the industries, they are in.
However, the disruption comes at a cost. The cost of a high failure rate in startups can be very reasonably attributed to trying something new and discovering the ‘unknown’.
To put things in perspective, startups only have a 10% survival rate. That means that 90% of startups close. (Source: Failory)
And though the majority of startups start with the aim of entering the elusive billion-dollar unicorn club, only 1% of the total number managed to reach there.
The bottom line is – 90% of startups fail.
So why do startups fail?
As per Jasmeet Singh, a startup and small business consultant in Australia, ‘ If you look at the statistics, the biggest reason for the failure of startups is “Ran out of cash” or “failed to raise new capital”, which essentially points to bad financial planning.
And that is only one of the reasons.
The others include – inability to develop a product or service people really need or poor teamwork.
So what does it take to build a successful startup?
In this blog, we list down the top 10 tips to help you build a successful startup and avoid the pitfalls that can lead to failure.
Here we go!
- Define your purpose
To become successful at what you do, you need to have a clear purpose before starting.
You need to be hungry for success and excellence because a lack of clarity of purpose is why most startups fail – for the simple reason that they either make a product that is not market fit or pivot with an unclear business model.
All the above is a recipe for disaster for a startup and are reasons for startup failure (source: CB insights)
A clear purpose and commitment increase your startup’s chances of success and help you as an entrepreneur focus better.
- Keep it simple and lean
In continuation to what I wrote above, a sense of purpose is followed by putting together a lean and straightforward structure.
From day one, do not start overloading your startup with big ideas.
Many successful startups across the world did not start to become the next unicorn.
On the contrary, they started with simple ideas.
Take the example of Airbnb founders Brian and Joe, who moved to New York and noticed that people struggled to find rooms in hotels during a major conference.
Voila! That was the idea that led to creating one of the most prominent startups in the world: Airbnb.
Simple ideas, a lean approach and continuous improvement are the simple things that make startups do better and grow based on user feedback.
- Be prepared for the worst
Failing to plan is planning to fail.
This is the first thing I tell all the entrepreneurs who come to me for consultation.
As discouraging as this may sound, you are better off preparing your mind for the worse, and in this case, it simply means over assessing the risks.
Better to over-assess than underestimate.
This is more especially in a competitive industry such as FinTech, where 7.1% of the startups worldwide operate (source: Firstsiteguide).
The bottom line is – Never to underestimate the market. Always have a [roper plan B or a risk management strategy in place if things go south/.
- Don’t stop innovating
Innovation is the backbone of every tech business.
Innovation can come from the pain points you get from your users, or it could be based on what you see as real-life experiences in your startup’s domain.
Always think of ways to make things easier for your users.
If you can stay ahead of your competitors, you give your startup an edge and more years to remain in business.
Most importantly, you are always one step ahead of large businesses that might outpace you with the financial backing available to them.
- Be ready to preserver
Does the name Jack Ma, Jeff Bezos, and Elon Musk ring a bell?
These people looked like they were crazy when they were starting.
Today, not only are their businesses thriving but their names have been inscribed in the sand of time.
Some of your ideas may sound crazy to some people, but if you are willing to follow through with your vision, you might astound yourself at the result.
Bravery in business is not a choice but a necessity.
- Build trust among the people you work with
It is essential that the people who work with you can trust your tech startup. This means that you need to carry everyone along from the onset.
Share your visions and dreams with the team and ensure that they buy into them.
Let everyone come up with their contribution as team members who have a voice in the startup.
If they can own the startup, they will be willing to go the extra mile to see it succeed.
- Be patient
While you put in all the needed hard work, don’t forget to give your startup time.
The entrepreneurial journey is not an easy one. Many entrepreneurs started this journey but did not make it.
Apart from lack of funds, many failed because the founder(s) gave up too quickly or ran out of gas (passion).
The challenge is not to only start the startup but to stay motivated to take it to the next level. This is especially true if the business is yet to pick up and make a profit.
Determine to stay in business for at least five years before throwing in the towel and calling it ‘quits’.
A proper plan aligned to your startup’s purpose and structure will help you weather the storm when you are faced with challenges.
- Seek help from experts
You may be the originator of the idea, but you need people to help you realize it or give it a shape.
There is no way you can do everything on your own.
Surrounding yourself with experts, you can draw from their wealth of experience helps greatly. Therefore, I recommend hiring more intelligent people and having varied expertise and skills to help you reach the next level.
Sometimes, delegating responsibilities to others helps you focus on what matters most.
The skills that you cannot get inside the organization can be complemented by taking help from mentors who have been through the grind and can share their journey to help you grow.
- Focus on your strength
This is like finding a niche that you are good in. Unfortunately, the startup space is very competitive, and only those with new ideas survive.
Stay true to it once you have found something that gives you an edge. Then, stay on it, improve it, and be the best in that area.
You can find your niche by discovering the loopholes from the more prominent competitors. Once you can create a name for yourself in that aspect, you become the go-to startup for the solution.
- Be wise with money
Your startup needs funding, no doubt.
But don’t start acquiring loans, especially when you don’t know if the business can pay it back.
Start with personal funding if you can and start lean. A lot of initial debt will only put unnecessary pressure on you to succeed earlier than expected and repay the money.
Think of simple steps like starting from your apartment before renting a space, travelling on public transport, then using cabs or spending on a fancy laptop.
As a simple rule of business, every expense you make cuts into your revenue and savings.
Cut off unnecessary costs, especially when starting new and be frugal with money.
Starting a startup is not easy.
Growing it to become successful is another ball game entirely.
Sometimes, you may even fall off along the way, but that does not mean you should give up.
Most entrepreneurs failed several times before they became successful.
Don’t just aim to bring big ideas that will change the world.
Small ideas like finding easier ways of solving existing problems might be the plug you need to pull.