The first year is the hardest and the most important year for your startup business. It is the time that will make or break you; even just surviving this period puts you in the upper %10 among other businesses. No matter how hard it is, it’s also extremely rewarding to succeed in your own personal goals. As an aspiring entrepreneur, you know this and naturally look for advice. So, let’s explore reasons for startup failures.
Here are 9 important points you should take into consideration to survive your first year in business and to avoid startup failures:
- Stop wasting time
- Test your business idea
- Be passionate
- Create a versatile team
- Focus on the customer
- Save time and money by outsourcing and automation
- Create a website for your business
- Embrace criticism
- Learn from your mistakes and other startup failures and move on
Stop wasting time
Scary fact: Roughly 20% of new businesses survive past their first year, according to USA Today. While that is a high rate on its own, if the businesses that were never founded at all were counted as startup failures, that rate would be much higher.
I get it, starting your own business is hard. Being your own boss with minimal resources and experience seems scary. But after you do your market research, minimize the risks and create a viable business plan, the best thing you can do is jumping right in.
This is also true after you launch your business. If you have a great new idea for your company, your best bet is usually just trying it rather than attempting to foresee every single outcome and trying to plan each possible step. Of course, there is a thin line between bravery and foolishness, so don’t take big risks in the blink of an eye, and at the same time don’t let the analysis paralysis get the best of you either.
Test your business idea
One of the most common reasons why for startup failures early on is simply having the wrong product or service. You may think that you have a phenomenal idea, but the bitter reality is that if there isn’t a need for your product/service in the market, chances of your failure skyrockets unless you somehow create that need yourself.
The good news is, we are living in an age of information. While it is not possible to guess the results with %100 precision, you can test the viability of your business before fully committing to it. Here are a few ways of doing it:
Check out your competition:
The easiest way to tell if your startup idea is serviceable or not is to simply look at the other people that are running a similar business. If there aren’t any people that are doing it, it is not that no one had your idea before, it is because there isn’t any demand for it. Of course, being a startup in an ultra competitive market isn’t optimal either, so you have to find a sweet spot.
Get to know your possible customers:
Who are your customers? Do they have money for your product? Why would they buy your product? Can you keep them coming back to you for more or is it a one-time thing? Try to answer these questions as honestly as possible, and you will get a feel for the number of people you can reach.
Get people to test your product:
You can get “beta testers” to test your product/service before launching your business to see if you are up to the task and if people like it or not. This can go a long way since the experience you will get from this will be very valuable, especially in your first year.
This seems obvious, and the last thing I want is to sound like a cliché motivational video, but many people think they are entitled to success just because they are willing to take risks for the sake of money, but they miss the true driving force behind entrepreneurship: passion.
You are building your own success, and that requires an immense amount of work. To be able to productively work that much requires true love for what you do.
Create a versatile team
If you want to play a symphony, you need an orchestra. While it is entirely possible to run a small individual business on your own, going any further than that requires a strong, versatile team that is willing to work toward a common goal in unison.
I know, versatility is an overused term in entrepreneurship. But in this case, it means much more than you think. In your early months of business, you will need to change products, adjust to new circumstances, rebrand your company, and a lot of responsibilities will overlap. You may even have to start all over again. Creating a talented team through networking is one of the key elements to success in business.
Focus on the customer
As a startup business, your most valuable asset is your customers. This is true for every business, but bigger companies can afford losing customers from time to time. You can’t. Your first customers are the ones that will bring in the needed capital, advertise your business by word of mouth and criticize you so that you can improve.
Do everything in your power to satisfy your customers and don’t be afraid to lose small amounts of money to do so. As mentioned above, get to know your possible customer base. Check the psycho-graphics and demographics about them.
VoterTide – an app for social media monitoring and analysis – that failed had said “We didn’t spend enough time talking with customers and were rolling out features that we thought were great, but we didn’t gather enough input from clients. It’s easy to get tricked into thinking your thing is cool.”
Save time and money by outsourcing and automation
The saying “If you want something done right, do it yourself.” does not apply to a small business owner like yourself. As long as you are able to afford it, getting someone else to do the routine jobs of a startup business lets you focus on the more important things. Hiring freelancers and employees effectively speeds things up, which leads to more growth and avoid startup failures.
For the jobs that do not require human-added value, a great option is to use bots. Online bots are easy to use, cheap and effective. They can send thank you e-mails, create and promote discount codes, produce social media content, regulate your online store and much more.
Create a website for your business
Having a strong online presence as a startup business in today’s digital age is getting more and more important. The internet usage is increasing around the world and more sales are being made online. You must create a good looking and functional website for your business that acts as a secondary salesperson and take advantage of different online marketing strategies like email marketing and social media marketing.
As a business, your job is to solve a certain problem. To solve a problem, you need to be capable. To increase your capability, you have to face and overcome challenges. One of those challenges you will face often during your first year of business is knowing how to handle criticism.
Sometimes, it is easy to get caught in the toxic mindset of the “hero CEO” and disregard any criticisms directed to you or your business. Having a co-founder helps to create accountability and increases the versatility in the leadership of the company but being mindful in your first year of business goes beyond that.
Embrace constructive criticism and learn how to handle destructive criticism. Be open to new ideas and know that you and your business will have to change and adjust at some point and accept startup failures. Being flexible is one of the most valuable skills in entrepreneurship, as it is in life.
Learn from your mistakes and other startup failures and move on
Failure is a stepping stone towards success as long as you are humble enough to learn from it. I am sure you know at least a couple of extremely successful business people whose failure stories storm the speeches about success around the world.
Of course, startup failures come in many different sizes. It can be as simple as losing one customer due to a small error, or as devastating as having to close your business. The bigger it is, the harder it is to recover from it.
Good news is, you can recover from anything. This is a game of ups and downs. Take the knowledge and move on. Next time will be easier thanks to your failure.
How badly do you want it?
Founding and running a business is one of the most thrilling experiences you can have in your life, but it is also very scary. That is why the objectives I listed are crucial for you to stay in the game during your first business year. Now, go out there with a plan and create a business out of the thing you are passionate about while learning to lead, adjust and grow.
The best way to end is with Henry Ford’s quote “Failure is simply the opportunity to begin again, this time more intelligently.”