Six Reasons Start-Ups Fail
Posted on 11. Aug, 2010 by admin in Blog
Ok. Not all start-ups fail, but many do. Why? Here are a couple of my thoughts on this. I attribute most failures to the following items:
- Undercapitalization
- Location Selection
- Operational Costs
- Management Experience
- Lack of good intel
- Poor Marketing/Promotion
First, and to me one of the biggest reasons, is undercapitalization. Most companies start with an unrealistic number in mind what it will take to start, market, and grow the business. Once started, cash is used on things the owners never imagined (think general liability insurance – who planned for that??). This starts with a solid business plan. When a solid business plan is in place, the business has a much greater chance of success than those who do not. A business plan does not have to be long and lengthy, but it does have to be good. It has to include all the important aspects of starting the business (including general liability insurance, marketing, etc.).
Second, many business owners do not select the best location for their business. I have seen too many times business owners select a location that is “a great deal…much cheaper than next to that Publix or Wal-Mart” only to find that the location next to the big anchor (while cost more) returned a much larger revenue share. Included in this is the failure to use a good commercial realtor who can provide solid data which supports the need of the business. Remember, cheaper is not always better.
Third, many business owners do not review operational costs on a regular basis. And most do not ever consider comparing those costs to that of their competition or the industry they compete in. While it may cost some money, the answers most likely provide significant insight and likely will return more than the investment (many times up to 30 times the costs)!
Fourth, most start ups are started with out solid management training. Whether the owner has 1 employee or 15 employees, some
level of management is required. This is critical to the owner who wants the company to grow. If you are a business owner with less than a few years of management experience (and I’m talking about managing less than 20 people), you probably should take some management course or work with an individual learning management techniques. Trust me, it will be well worth the money.
Fifth, without good information about your industry and your competition, you will be shooting in the dark. Knowing about the technical tasks within an industry is not enough. It takes a strong strategic approach — knowing where the industry is going and what areas are holes in the direction the industry is going helps to solidify your company.
Last, talking earlier about a strong business plan includes a strong marketing plan. Analyzing where you should and actually are spending your marketing dollar is critical to strategically approaching your marketing dollars. Marketing is about getting your name out in an effective way. Learning to get your name out effectively, whether through word of mouth, networking, chambers, direct mail, or radio and tv advertising is critical to your success. Hire someone to do this for you…it will be money well spent.
The morale of the story: Surround your self with talent (whether in the employee world, the 1099 world, or the vendor world). The strength of the talent surrounding you will be the ladder that gets you where you want to go or the coffin that puts you in the ground. You decide!
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Using WordPress.
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Yes you may. Thanks
Rob
clear and conconsie
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