A Few Reasons To Fail – Startups

Why being so negative and talking about failure and not success? Well, that’s because unfortunately it is so much easier to fail than to it is to succeed. As an entrepreneur, I never  consider a “failure” as a “failure”. I take it as a (costly) learning experience. 

It’s for this reason that we should alway be connecting and sharing our experiences, both successes and failures, to help other to follow our footsteps that stayed on the right path and avoid the footsteps that led us into the middle of nowhere. 

 To do that, I will follow the post sent by CBInsights: 

The Top 20 Reasons Startups Fail:

1) No Market Need

           Definitely the most important. As an

           investor, I am always curious about 

           what the market thinks of the projects we

           invest in. I have met very smart people,

           with very brilliant idea, the only problem is

           that the market doesn’t need or want it. 

           Don’t do something that people don’t need,

           it may be a fun experience but it will fail

           sooner or later. 

2) Ran out of cash

               Unfortunately money is essential to scale.

              You have to burn cash to pay your employees,

               do your marketing, etc. Prepare well your 

               budget, control your cost and spend enough

               time to connect with potential investors. 

               Startups move fast, if you wait when you have

               no money to find it, it will be too late. Most

               of your employees will not stay working for

               you without a salary.  

3) Not the right team

           I mention in a previous post that a great

           company can only be done by a great team.

           Sometimes founders are under pressure and

           just fill some position rather than finding

           the best talent for each open position. Very

           important that you get the best individual

           for each position otherwise you will have to

           manage a team that yourself don’t believe in.

4) Get outcompeted

           Competitors are strong and fast, especially

           in China. Follow the competitors move, learn

           from them, and always challenge your company

           to surpass them. Hire their people if needed,

           this is a fight and only the best will win it. 

5) Pricing / Cost Issues

           Pricing strategy is very important. I remember

           reading something about Elon Musk who says that

           he will never accept any reduction for any Tesla.

           If there is a correct pricing there is no need to

           negotiate. Make sure that your pricing is correct

           and of course control your cost as well. 

6) User un-friendly product

           UX is one of the most important roles in a team, 

           however it is rare to see a position of someone

           working soley as UX. UX means User Experience. 

           Make sure that your customers understand how

           to use your product. You developed it, you know

           exactly how it works, but does your client

           understand it? 

7) No Business Model

           It is unfortunately the end of the era

          where a lot of companies can become

           unicorns without making money. Maybe

           only bike sharing in China is the exception

           the past few years but most startups today

           need to make money to survive. 

           Do not forget that your project needs to make

           money and you need to have a clear business

           model. 

8) Poor Marketing

           Sometimes you have a great product

           great team, & enough money. The problem

           is no one knows about your product. 

           You need to define a marketing strategy

           to make sure people know about you. Do

           make sure to also control your customer 

           aquisition cost as well. 

9) Ignore Customers

           Everything you do is for them, it is mandatory

           to get their feedback, deal with complains etc.

           You should spend time to talk to your customers.

10) Product Mistimed

           Not the right timing, you are too late

           or maybe too early to get into this market.

 

11) Lose focus

           There are so many reasons why you may

           lose focus, you have to deal with a

           problematic team and you become more

           a kindergarten teacher than a CEO, you

           need money and you spend more time

           to try to raise funds than to focus on your

           customer and product. Always try your best

           to not lose focus. 

12) Disharmony Among Team/Investors

           I have unfortunately met too many people

           who’ve had this issue. A good project, making

           good money but decision-makers have

           different vision, there are shares involved,

           someone wants to quit and problems start. 

13) Pivot gone bad

           It is rare that a company succeeds from the first

           product. You need to try, you need to pivot

           sometimes. Of course that may be the wrong

           decision at times, but it may also be the wrong

           decision not to adapt. 

14) Lack of passion

           Result is not as expected but you still have to

           put a lot of energy every day. Then you may

           have a lack of passion. In my opinion, if you

           have lack of passion it means that you were

           not ready to start or even maybe not the right

           one to start at the beginning. It may happen. 

           Think twice before starting another project.

15) Failed Geographical expansion

           Scaling up is key to make a unicorn company. 

           You need to plan it well, plan your money. Scaling

           up means that you have to increase X # of your

           team, X # of your customers, and (eventually) 

           X amount of your revenue. 

16) No financing / Investor interest

           Yes, this may happen. If it does, it is certainly

           for one of the reasons mentioned previously.  

           It is easier to put the responsibilities on others

           but at the end of the day it’s still your company

           your project, and your dream. 

17) Legal Challenges

           Startups disrupt. Therefore sometimes that

           means working in a grey area. Startups need

           to fight to make grey area become a legal one

           but sometimes it may go to the other direction

           and government will have to shut down your

           operation. 

18) Didn’t use network

           You need to talk to your peers, don’t stay

           behind your desk and computer, meet with

           others, discuss about your problems and

           get help when you need it. Use the network

           you are in or you are out of it. 

19) Burn Out

         Sometimes, everything goes wrong, in your head too

20) Failure to pivot

           Sometimes it is better to pivot than to fight

           for something that even you as CEO do not 

           really believe in. Some people want to keep

           face, don’t want to fail, and therefore don’t

           pivot. This will lead to a failure. 

As we say in Chinese, Jiayou

加油!

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