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Why Startups Fail
Nine out of ten startups will fail. This is a hard and bleak truth, but one that you’d do well to meditate on. Entrepreneurs may even want to write their failure post-mortem before they launch a business.
Why be so discouraging? Because very optimistic entrepreneurs need a dose of reality now and again. Cold statistics like these (9/10 fail) are not intended to discourage entrepreneurs, but to encourage them to work smarter and harder. Therefore, to succeed one should learn from the admirable others who have failed (success stories are few and far between). By investigating failure, the seeds of success may be uncovered.
Four Causes of Failure?
“Study the past if you would define the future”
~ Confucius
~ Confucius
Nine out of ten startups will fail. This is a hard and bleak truth, but one that you’d do well to meditate on. Entrepreneurs may even want to write their failure post-mortem before they launch a business.
Why be so discouraging? Because very optimistic entrepreneurs need a dose of reality now and again. Cold statistics like these (9/10 fail) are not intended to discourage entrepreneurs, but to encourage them to work smarter and harder. Therefore, to succeed one should learn from the admirable others who have failed (success stories are few and far between). By investigating failure, the seeds of success may be uncovered.
Four Causes of Failure?
- The product is not perfect for the market: The startup makes a product no one wants (42% of startups lack a product the market needs*).
- The entrepreneur ignores something: Good product ideas and strong technical teams are no guarantee of success, especially if you ignore other critical issues (business processes!).
- The company does not grow-fast enough: Growth leads to growth, which leads to even more growth. Marginal, single-digit growth rates, do not make for a sustainable business. If the growth doesn’t happen, then the growth will never happen.
- The team does not know how to recover: Startup teams must master the ability to; change products, adjust compensation plans, develop new marketing approaches, shift industries, re-brand, pivot and even start all over (or quit?). Remember, startups with co-founders have a higher success rate.
Dr. Gerard L. Danford
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