Most entrepreneurship articles start with intro statistics, whose purpose is to show to wannabe entrepreneurs that thousands of companies are being incorporated every week and that they can easily turn their idea into a startup with few hundred dollars’ worth of investments and a little bit of computer work. The reality is usually much more depressive, so we will start this article with grim statistics, which say that:
- More than 92% of all startups fail within first three years of doing business;
If you don’t want your company to add up to this unbelievingly high percentage, you should carefully read this article because here we will share some of the most effective strategies that will shield your startup from failing.
Maintain cash flow at the highest possible pace
CB Insights determined in their analysis of more than 101 dead startups that ‘Running out of money’ is the second most common reason for a startup to fail after ‘No market need’. That’s why entrepreneurs need to react fast when cash flow starts slowing down. They should:
- Get rid of their products before they accumulate;
- Invest more money and effort in collecting debts;
- Learn how to make business presentation to investors more attractive;
Remember that startups revenue is the most important parameter of its success.
Ask for professional help to find your way out from bureaucratic maze
Many startups face a long list of legal problems. When dealing with the county, state and federal authorities, even the smallest bureaucratic misunderstanding can be turned into a huge problem that can shut down your startup for good. Many entrepreneurs don’t ask for a professional opinion on legal matters and hire lawyers when it’s too late, and their company is already being liquidated. That’s why you need to have a lawyer hotline from the day one, and many business lawyers from Sydney are surely up for the task.
Customize products for targeted market
Many entrepreneurs (especially the ones without prior entrepreneurship or marketing experience) design their product according to their own tastes and needs, without conducting any market research or consulting marketing experts. Most of these products lack market need, which means they will hardly spark an interest among the consumer masses. Only way to prevent this from happening is to conduct market research and ensure that product suits wants and needs of targeted audience.
Fix all bugs before launching
Tech startups often launch their apps before they have been thoroughly tested, which makes them more vulnerable to criticism and less popular among latest tech enthusiasts. Some entrepreneurs do this because they can’t wait for testing to be over. With this they are making a huge mistake that can cost them their business, time and money. Many great ideas failed because of few silly-sounding bugs. That is why each app needs to be tested and fixed, before its launched and hiring professional testers for this task is always a good idea.
Invest in marketing
No matter how good your idea is, you should always single out at least 10% of your income for marketing costs. Digital marketing gives us many opportunities for promoting our products and services and it will be a shame not to use them. With several hundred dollars you can target the same amount of Facebook users, as you were targeting with TV commercials worth several thousands. Other than Facebook Ads platform and other forms of digital marketing, like AdWords for example, you should also introduce different kinds of old-school guerilla marketing campaigns and different PR stunts, which are the only traditional marketing tactics that are still very effective..
Startup businesses require constant care and attention. Many entrepreneurs don’t know what they are getting into, which is also a very common reason for startups to fail. Don’t start your business only because it is trendy and you want to hang out in workhubs and brag to your friends, because you will lose: time, money and motivation to pursue better projects in the future.
Written by John Stone who is a business consultant and regular contributor to Bizzmarkblog. He believes in the notion that form should always follow function and that thinking outside of the box is a prerequisite of being a successful entrepreneur.