Why Most Small Businesses Fail – With the growing number of startups and local businesses under quarantine, we’re all eager to try our luck and see if we have the guts to make a buck.
This is fair and reasonable. When we think of ourselves as the new Jeff Bezos or Mark Zuckerberg, every now and then we feel a sudden rush to “go get it” and “conquer the world.”
Why Most Small Businesses Fail
Let’s just stop our thoughts at this point and think about what it is that we are trying to create. Do we know enough about its creation, existence, marketing and, most importantly, its ability to make a profit?
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Such serious questions must be considered before taking a big step. According to Startup Genome’s 1010 report, 9 out of 10 startups fail, and the Bureau of Labor Statistics reports 2 out of 10 startups fail in their first year.
This article will help you get all the answers on how to avoid crushing your startup in a free and highly competitive market. Because believe it or not, it’s crazy. The stakes are incredibly high. Your little dot is always in danger. And you need to do your homework.
While these reasons are among the most common, there is still some debate as to how they relate to your niche market, audience, goals, and strategies. Without further ado, let’s get down to it.
Think it’s the same old boring school story? Wait until you find out what we mean by that. Remember how in school you had to get a good score on a math test so your parents could get your favorite food or toy?
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Not much has changed except that your favorite food or toy has turned into a 6-figure income that you want to make. And your homework is to study your product, financials and market for it. Sounds fair, right? Let’s scroll down to some areas that need homework:
A business model is like a blueprint for your startup. Without this in hand, no matter how hard you try to build your enterprise, it will come out deformed and unreliable. It will tell you how to profit. According to CB Insights, 17% of startups are doomed to fail if they don’t have a clear business model.
Microsoft’s “business model,” for example, was to sell software for $120 a piece that cost fifty cents to produce. Without a business model, you can’t
The “we know it all, man” attitude is most common among more educated entrepreneurs. But believe us, the market does not reveal its secrets and stories to those who put their noses in books and not in their nooks and crannies. A good book and good exposition will make it so much better.
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Many startup teams fail to understand that learning is a two-dimensional, dynamic process. How is it? There are two time frames that require your team to come together and study your business, market, customers, etc. Once before you enter the market and once after you do. Yes, teams too proud or neglectful to keep learning eventually bite the dust.
This is a bummer. What’s a startup without accurate notes filled with your bank accounts and lockers? This question is a valid concern. Startups would likely abandon a promising idea like Amazon if there was no concrete cash flow.
Entrepreneurs ignore the fact that it takes a great business cycle, probably years, to make a profit. At the same time, money for existence is crucial for sustaining machines and minds. This is why your business idea gets destroyed in no time.
It takes about 0.05 seconds for users to form an opinion about your website that determines whether they will stay or leave.
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Even a Google study noted that users only need 50ms to form an opinion about your website design.
Have you checked out our home page? We place great emphasis on creating the best first impression for our customers.
Think of any brand that is in the top 10 right now. None of them work without a presentable website. That just says it!
Perhaps the oldest and most basic reason for startup failure is a fierce competitor, ruthless and fearless. The international free market operates according to only one rule – let the best man/woman win!
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The last reason in this section has a lot to do with your confidence and ego. Think of it this way. You’re enrolled in a biochemistry course at college and you don’t understand a word the teacher is saying. The next day you will have a test on a large number of sections. what are you doing finish? Wait a minute. A cousin lives a few miles away and is studying biochemistry at university. But what if he makes fun of you for not being smart enough?
Now you have two options. One is to have the courage to approach him and ask for help. Two – it won’t work. It’s that simple. Teams that do not look to their mentors and established business people in their specific fields are very prone to failure. The choice is literally in your hands.
Of course you know how to play by team rules. You were a member of the college council or the captain of the school cricket team. Do you think startups work by the same rules? Let’s find out.
A startup is not a Saturday night party where your best friends come over, joke around, play a few games, hang out together, and bring the best product to market next Monday. This is business! Getting the right team together is very important at Harvard.
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A great team needs people related to the same field, creative minds, moral personalities, reliable partners and the same vision of work. It requires stepping out of your comfort zone and choosing without bias. This human failure leads to an incompetent team, laziness, or a lack of seriousness about the goal.
Many startups would choose a partner for many reasons. It takes the burden off, keeps you on track, shares responsibility, and gives you courage in the face of impending setbacks. Agreed. But did you know that they can be the main reason why you can’t work?
A startup is like a miniature state. It cannot function or be held accountable without a leader who aligns with its vision.
Well, we could write a whole six-volume book about it. But that will only wear you down. Let’s move forward.
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This applies to everyone involved in the startup. Trial and error is by far the most natural and effective way to achieve success. “Trying and ignoring” is the most effective way to get rid of this success.
Startups are more likely to blame external circumstances — market trends, unsympathetic customers, national issues — than their own incompetence. Perseverance is key.
You would be surprised to know that a study by the Harvard Business School in the US, published in the Journal of Financial Economics in April 2010. He quotes, “entrepreneurs who have failed before have no more chance of success than entrepreneurs who are starting out.”
The ability to learn from failure requires psychological reflection. Affected parties find it too time-consuming and sometimes unnecessary. Instead, they’ll just pick up what’s broken, find another investor, and start over. And we all know they will likely fail again.
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Most of you would rather blame your failure on other factors because the product or service you plan to offer is too personal for you.
Making a sacred icon out of the product of your dreams is the biggest mistake any entrepreneur can make. Look out for the following factors that lead to startup disasters:
Not to sound harsh, but it’s true. As much as you may hate it, there are “bad products” on the market. MIT wrote an excellent article on product quality.
There are quite a few reasons why your product or service ends up drowning in the ocean of the free market:
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Uh, what? Has anyone ever told you that you are creating your own market for your product? Then you need a mythbuster. According to Forbes, the number one reason startups fail is “lack of market need.” This can be due to two main reasons:
Think about it, would you start a company that sells skateboards in a desert area? This is madness and absurdity. Would you open a fancy bookstore in a city where a large portion of the population lives below the poverty line? no! no! no! And no!
Let’s look at it from the perspective of the founders of the failed Treehouse Logic, a visual configurator platform company. They believe that “startups fail if they don’t solve a market problem.”
You don’t build a startup after years of hard work only to shut it down within months. Startups will not give the market or customers time to adapt or attract attention to their product and immediately run to “shut down”. This is an unprofessional approach.
The 4 Most Common Reasons A Small Business Fails
Alibaba’s Wikipedia account states that “in 2002, Alibaba.com became profitable three years after launch.” That’s why once every ten years we see the likes of Jack Ma take China’s e-commerce industry by storm.
People love fantasy. we
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