Launching your app and getting no downloads for several months is a failure. But finding those first users through trial and error is a variety of sales and marketing tactics and a solid lesson learned. Everyone knows failure is crucial component to finding success. But that doesn’t mean you can’t learn from other people’s failures also. The purpose of this article is to help guide you through common failures in the startup scene and how you and your team can avoid them.

1.  They Don’t Have Tenacity and Perseverance

One of the biggest reasons startups not only fail but never truly launch in the first place is because they have no tenacity. Without the will to persevere through tough times your venture is doomed to fail before it even begins.

The determination to succeed in business is what makes the hardest days bearable. No matter how prepared you are there will always be obstacles like these along the way:

  • The app you spent months building will crash on launch day.
  • The post office will lose your package and your client will write a bad review.
  • Your family will get upset because you are spending too much of your free time on this venture and not enough time with them.
  • Your web designer will suddenly stop answering your emails.
  • Your client will be late paying their invoice.

The day to day of building your business will be riddled with issues and barriers just like these. It would be too easy to walk away after all these problems. Especially if they all happened in one day. The best thing you can do is not get demoralized and not give up. Push through the pain. You will lose some sleep, spend money you didn’t expect to, and make countless calls and emails to get it fixed. But in the end you will find solutions to all the problems you face. You just have to be gritty, patient, and a little stubborn.

2. They Didn’t Understand Their Market

They make a product and spend so much time and money marketing, advertising, and developing a product that no one wants.

To avoid this pitfall you should really analyze the market of your product or service. Dive deep into your competitors offerings and find ways to truly differentiate yourself or completely disrupt the market. Find the answers to these questions to see if you truly have an opportunity worth pursuing:

  • Who is your ideal customer?
  • What problem does your product or service solve for your customers?
  • What websites do your ideal clients visit?
  • Who are your competitors?
  • How much are your competitors charging?
  • How can you differentiate from your competition?

Services like Google Trends or Moz Pro can help you with competitor research, finding opportunities, and understanding what your ideal customer is searching for. From there you can start asking online communities about your offering to get feedback from potential customers. You can often find them on sites like Reddit, Quora, or even in Facebook groups.

3. Their Cash Flow Dried Up

Time and money are finite and need to be allocated wisely. Being obsessive about your cash flows and cash flow projections can give your business much needed time and money to adapt in difficult times.

Overestimating future sales volume is one area where many startups struggle. Relentless optimism is engrained in entrepreneurs but should be countered when it comes to sales projections. Set your future sales expectations on sound judgment and objective facts. Doing so will protect you from overspending based on a fantasy plan that may never actually come to fruition.

Don’t be passive about past due receivables either. Too often startups let these late invoices start to stack up and that is a big mistake. The longer you wait to get paid the less likely they will ever pay you. You should be proactive in collecting payments from clients and partners alike. Be sure to reconcile your bank account and outstanding invoices weekly, if not daily.

It’s also a great habit to keep a cushion of cash on hand to protect your from unexpected expenses and low sales volume months. Both are inevitable, so planning for them ahead of time can help you stay afloat during the rough patches.

4. They Ignored Their Customers

A tried and true way to fail is to ignore your customers. This is an all too common failure made by startups and can have very fatal consequences for the business. It’s easy to get tunnel vision and focus on the wrong areas of your business instead of getting much needed feedback from your customers about the level of service they received and desired features.

Customer service is a key component to creating not only happy customers but brand promoters. Whether you are large or small you should offer surprisingly good customer service. Respond to your fan mail and your hate mail. Critics and raving fans alike can have great insight to how you can better serve your users and customers.

This can easily be remedied by giving multiple channels to gather feedback on. This can be as simple as a short call or email survey with each transaction asking basic questions about the service or a simple contact form on the website. Creating this feedback loop will keep your company focused on the right areas to keep your brand strong and your customers happy.

5. They Built A Losing Team

In his widely popular TED talk on the single biggest reason why startups succeed, Bill Gross outlined Team/Execution as being the 2nd top reason why startups succeed.

Reasons Why Startup Fail

Picking a co-founder is like choosing who to marry. If you don’t get it right your life will be miserable. The best ideas can be squandered by the wrong team and even the worst ideas can work with the right team in place. There will always be opposing viewpoints and some slight power struggles. But what you want to avoid is downright toxic people who bring negativity to your project. The type of people who drag people down ,smother creativity, and simply can’t execute.

It’s also crucial to have a variety of skillsets. Technical and non-technical co-founders all have their place at the table and bring tremendous value. When you stack your team to heavily in one direction problems will arise. Naturally you can’t prepare for every skill and each team isn’t rounded out without a few freelancers for short periods but ultimately you should be able to launch your product with the team you have built.

Summary of Reasons Why Startups Fail…

Overall, the startups that succeed are the ones that find a profitable niche, have reliable revenue streams, and actually listen to their users.

Be prepared to fall and rise several times over before you truly succeed. It’s a rite of passage for becoming a successful entrepreneur.

In Scio we provide nearshore, outsourced engineering teams for software development. We’re aware of and deal with the problems and common failures that new entrepreneurs face daily on a daily basis. We have experience across many industries and many project sizes. If you are interested in hearing more about how our approach could benefit your next project – Contact Us.