In 2015, India saw 14 startups shut down. 2016 was a similar case, with 18 shutdowns in the first 5 months. Analysing their journey can give some insight for your business. It can show what approaches they tried and why they didnâ€™t work.
Hereâ€™s What You Shouldnâ€™t Do
- Co-founder Clashes
Having more than one founder opens up chances for differences of opinion. A start-up begins with only a few people, and every person counts. If everyone isnâ€™t on the same page and donâ€™t work together, then itâ€™s highly unlikely that theyâ€™ll succeed. A lack of open communication and conflict of interest can be crippling to a startup.
- Crazy For Capital
With venture capitalists ready to pour money into startups like never before, itâ€™s easy for founders to be tempted to raise that capital. Although this might sound like a good thing, it can actually be detrimental. Having too much capital can mess up your finances and can force you to attempt scaling your company too fast. That again creates a lot of problems on the financial front.
- Lack Of Expertise
The founders must know their craft. There is absolutely no way a company can beat its competitors without knowing their product or service completely. They should also understand what the customer really wants from them.
- Underestimating Competition
There are 1,10,000 e-commerce websites that are currently online. Thatâ€™s not easy competition in any definition. When startups launch their business, itâ€™s highly probable that thereâ€™s a more established competitor in that segment already. Without a solid idea of how to tackle that competition, and underestimating them, the startup will more than likely fail.
- Lack Of Originality
Startups often lack creative and out-of-the-box ideas. If the business model isnâ€™t unique, itâ€™s likely that customers will ignore it. Even if the idea is brilliant, thereâ€™s a very good chance that thereâ€™s other people who are also working on the same thing. This makes it pretty difficult for a company to be completely unique. In fact, even with automated online tools like website builders, website hosting, shop name generators, and logo makers, it takes a lot of creativity and hacking to come up with original content.
- Lack Of Passion
Getting funded, putting together a team, sourcing materials, and building a website is a lot more easy than it used to be. But thereâ€™s never going to be substitute or automation for pure passion. Without the drive to succeed in the field of your choice, youâ€™re not going to get very far in running your business.
- Poor Marketing
There are a lot of examples of great businesses that failed due to poor marketing. However great your business model, product, team, and idea may be, if it isnâ€™t marketed well, thereâ€™s no way the startup will succeed. Underestimating the importance of marketing is one of the oldest reasons that startups fail. You need to set a proper budget and allocate resources to marketing, regardless of what industry youâ€™re working in.
- Over Scaling
Scaling more than necessary happens when estimates are wrong or thereâ€™s too much funding. In this case, they end up scaling more than they actually need. This leads to money leaking. Eventually, thereâ€™s no real progress happening. Thatâ€™s a classic example of how not to use a resource.
- Avoiding Risk
Business and risk taking are two sides of the same coin. A person who is afraid of risk canâ€™t do business. A startup that doesnâ€™t take risks and leaps of faith will eventually fade away.
- Not Keeping Up
One of the biggest reasons that startups fail is because they fail to stay up to date with trends. Any business that fails to do this doesnâ€™t survive on the market for long. Itâ€™s necessary to keep track of what the target audience is interested in. When you do that, you should position the brand and marketing campaigns according to those interests. This doesnâ€™t include just the strategies, but youâ€™ll also have to update the products if youâ€™re going to adapt to a rapidly evolving market.