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90% of startups fail – what do you need to do to ensure you’re in the 10%?

I’ve had success in new businesses but also startup failures and am happy to share my personal view as an entrepreneur on exactly what you should not be ignoring if you have a startup business.

Startups are exciting. You have an idea, you dream about making the big time. Money, respect, a thriving business, rubbing shoulders with the big boys and girls, success. You see a hole in the market and you know you can fill it.
Starting a business from scratch is exciting too. Building the blocks one step at a time and seeing your idea come to life.

The SBA (Small Business Association USA) states that 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10.

But with the right planning and these tips, you will have a much better chance to make sure your startup doesn’t fail.

Research on the Market

This is really important. Is your product actually wanted and/or needed by your target market? Do some research and actually find out first. It’s not enough to ‘think’ everyone will want it. While you’re researching the market, find out if you have any competitors and research what is liked or disliked about their product. Can you improve yours? It’s ok to come in as a competitor but you have to have an improved product to what is already there – or a USP (unique selling proposition). Find out also if you will have any players in the industry trying to shut you down or out. This may not be enough not to stop your startup but it pays to know what you’re up against and why from the beginning.

Partners

Your partnership can make or break the business. A variety of skills are useful rather than everyone being an expert in one area. Otherwise you need a large budget or investment to pay people from the beginning to do all the other tasks that are required in a startup. Everyone needs to be clear on what their role is and tasks. Also ensure that your contracts are tight and in place. Many businesses end up in court with lengthy, expensive litigation between business partners. Nothing would be worse. One startup we had left part of the team doing all the work and the other half doing absolutely nothing. Everything is fun and happy to start off but think of every worse case scenario before you get going and put strategies in place.

Business Plan

A good business plan will, among other things, detail what will be involved to get your business off the ground. It should include your company position, products and services, market analysis, strategy and implementation, organisation and management team and your financial plan and projections. The business plan should also include time lines and dead lines.

Not Enough Money

If you have a premium product your marketing tools and material will need to also be premium and not done on the cheap. We speak to a lot of startups and they all start off by telling us they have no money for a good website or marketing strategy or solicitors or accountants! Start as you mean to continue and if you haven’t allocated money to cover costs in the beginning then you should be looking at either a loan or investment or, being blunt, not getting started.

Not Scaling Fast

Scaling fast means money coming in. Scaling too slowly and you will be left struggling or worse out of business. If you don’t have income, you die. Also to get funding, most investors want to see growth. Not scaling fast enough means losing to the competition, losing customers, losing personnel, and losing passion.

Inflexible

Sometimes you can start with the best idea but it just doesn’t work. Airbnb are a great example. They started with one concept of 3 guys renting mattresses on their apartment floor  to help cover their rent.  However, their concept evolved to what it is today which is renting out whole houses/apartments or rooms and they are now a 10 billion dollar company. The current concept evolved from the original one and they were flexible enough to realise they needed some change. So, keep an open mind and don’t be rigid.

Negative Outlook

Knock backs and blows will be par for the course – startups are never all smooth sailing. It may well look that way from the outside but, believe me, they never are. Even Facebook and Google would have had their issues. Uber has had court cases in many countries and is banned from operating in quite a few too. What I’m saying is that a startup is not for the faint hearted. You need to be able to bounce back from set backs and find positive solutions to keep moving forward.

So, these would be my top tips for how to make sure your startup doesn’t fail. Others will have different tips but from my experience these are the most important things that have affected mine.

Judith Shuttleworth is the owner of HotsWots Digital and also one of the Directors of Open House ID, an app for real estate agents. For more information or digital marketing advice, contact us today.

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Judith Shuttleworth

Judith Shuttleworth is the owner of HotsWots Digital and a Director of Open House ID, an app for real estate agents. We have a range of expertise in all aspects of digital marketing and provide personal customer service. Your success is our motivation.

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