While gleaming stories of successful startups like Flipkart and the idea of in-office Friday night happy hours are more than enthralling for those wanting to get a taste of the startup life, the reality is, more than 75% startups die or will die within the first two years of starting. With myriads of startups globally building new products every day, it’s no surprise, 75% of them fall short.
Entrepreneurs can learn as much from failures as successes. Unproductive marketing, poor management and lack of cohesion in teams are some of the many reasons why startups fail. We often hear stories about startups launching a new line of products or startups raising $X amount of capital, except if truth be told, oftentimes these “successes stories” are nothing more than another shot to survive an extra couple of months.
To help all the startup enthusiasts out there, here are some key lessons to learn from various failed startups:
- Before building your product validate the product idea with customers
Oftentimes entrepreneurs underestimate the importance of validating their product ideas with potential customers. Think about it – what if nobody wants to buy what your company has to offer?
When it comes to launching new products, you’re clearly making assumptions, at times, a lot of them. You need to validate your key assumptions and hypotheses as early as you possibly can. You’ll discover that some of your assumptions were wide of the mark. If you catch the wrong assumptions early on, your startup is going to be in business for a very long time.
- Underestimating the value of partners, co-founders and team members will lead to failure
A novel idea is the catalyst to gets things in motion; however at the end of the day, it’s the team that’ll ultimately establish the failure or success of your startup. Launching a startup company without a co-founder or partner is rather tough. Assuming you are exceptionally brilliant and good at what are generally diverse skills (sales, technology, finance, operations), then it’s feasible you could pull this off. But, if I were in your place, I’d rather not, even if I could.
Kicking off your startup can be a lonesome process and partners and co-founders bring you more than just their capability and competence– they provide moral support. Having the support of co-founders and team members helps in getting your ideas hashed out, delegation of tons of work and in my honest opinion, generally boosts the odds of success. As a budding entrepreneur you must understand that you can’t do everything. Some tasks lie beyond your capabilities. Therefore it’s imperative to involve the right partners and team members for the success of your startup.
- What to expect from fundraising
Many founders focus all their resources and energy on building a unique product and finding customers, and when they stop to catch a breath, they discover that they need to raise capital from outside. So they jostle to create a pitch, unearth potential investors, and solicit funds —yet, more often than not, they fail. They wind up with no money, and, at times, no company.
While you are gearing up to launch your startup, anticipate and expect the fundraising process to consume a lot of your time. Startups should expect to pitch more than fifty investors in a week, and doing that much work takes a lot of time.
- Build an inimitable product
Today’s entrepreneurs can’t limit their product offerings to an explicit niche audience. It’s just not viable to make money that way. But be wary that you don’t end up copying another startup. Taking a successful idea from someone and building on it is no sin. If truth be told, it is how most successful entrepreneurs have built their businesses.
Stephen Key, cofounder of inventright.com website has licensed over 20 products in the past 25 years, he says, he generates ideas by discovering different ways to engage his mind, from walking through aisles of stores to brainstorming in the marketplace, “You have to come up with a lot of ideas to be successful,” says Key.
- Startups need right investors
It’s apparent that as an entrepreneur you need investors, unless off course you are independently wealthy. What’s important here is not just to find investors but to find the right ones. What if the investors and the entrepreneur are not on the same wavelength professionally or personally?
Entrepreneurs must do the similar due diligence on a prospective investor that investors do on them. Check up on their track records, management style and values. Working with an investor is a long-standing relationship that has to work on every possible level.
In light of all that, my recommendations to entrepreneurs who are looking to start a business – fix what’s conked out and don’t get slumped at the bottom of the concrete wall. Don’t just read about the failures of fellow entrepreneurs, instead take inspiration from them, it may just save your startup venture.