The era of the Millennials has been accompanied by an increase in the number of entrepreneurs. Consequently, the number of startups has also increased. Despite the increase, Patel, Neil, a contributor to Forbes magazine, asserts that approximately 90% of the startups today fail and only 10% succeed. Currently, potential entrepreneurs want to understand why only a few startups succeed. This article discusses some of the major reasons that contribute to startup success.
Proper market research is a key contributor to startup success. Many startups that fail often do not conduct a market research prior to entry. Market research is important because it provides essential information about market dynamics such as price trends, market needs, and consumer habits. Startups have to understand the concept of market dynamic to succeed. This is because knowledge of the market dynamics enables an entrepreneur to determine the positioning strategy, as well as the marketing strategy the business could use to gain a significant market share.
The top reason for failure among startups is making a product or service that the market does not want. Patel, Neil stated that 42% of failed startup failures could be attributed to the development of undesirable products or services. Therefore, successful startups should commence by developing a very desirable service/product. The product/service should suit the needs of the market to ensure success. This can only be achieved if the entrepreneur carried out proper market research to determine the market needs.
Another factor that determines the success of a startup is the level of commitment shown by the founder. Even though some entrepreneurs start a business with a desirable product/service and a good market research, their attitude and level of commitment often determine the level of commitment the business could achieve. Entrepreneurs who take little interest in their startups or lack patience to gain customers often end up failing. For this reason, it is imperative that the entrepreneur shows commitment. A startup has an organic setup. This implies that responsibilities and roles tend to overlap. The founder is required to commit to all roles and responsibilities irrespective of whether it was his duty or not. Patel, Neil intimates that successful entrepreneurs must be at the heart of the startup activities to ensure success.
Good Balance between Business and Technical Knowledge
Business knowledge is usually very important towards the success of a startup. However, for the startup to meet all market requirements, the entrepreneur has to have a balance between business knowledge and technical knowledge. Often, when startups commence operations, they need legal validation and guidance. Entrepreneurs are usually equipped with knowledge about business licenses, and other operating documents such as health certificate. However, other technical knowledge, such as the procedure for incorporation and legal liabilities of the entrepreneurs is usually not readily available for the basic entrepreneur. For this reason, entrepreneurs need to involve other parties such as lawyers to ensure that they follow the correct procedure prior to starting a business. A good balance between the technical and business knowledge often ensures that future disputes or challenges are eliminated, thus enhancing the chances for success.
The majority of the entrepreneurs fail because they fail to plan for business contingencies. One of the main issues that often affect startups is rapid growth. Most well-structured startups that enter the market with a good product tend to experience rapid growth. As such, they need to capitalize on the growth to succeed. Capitalization of growth opportunities can only be achieved through proper planning. Good startup planning demands that the entrepreneur plans for potential business growth. This implies that the founder should have a means of obtaining extra finances or have a way of attracting investors when the business starts to grow. Failure to plan for growth often leads to stagnation and eventually shrinkage or total failure. For this reason, it is always important for startup owners to plan in advance.
A recent increase in the number of entrepreneurs has overseen an increase in the number of startups. However, only 10% of the startups succeed in the market. Success for these startups can be attributed to proper market research, founder’s commitment, and a balance between business and technical knowledge. In addition, successful startups plan for any business contingencies such as growth. Strict adherence to these success factors would ensure that your startup wins.