Every day, we see new startups pop up. Some survive, but most of them fail. We hear stories of successes, and we hear stories of failed entrepreneurial ventures. What we don’t hear is the similarities and the lessons that these successes and failures share. In fact, amongst all the failed entrepreneurial ventures across the globe, failure lessons are similar. We share with you the top five lessons that most of these failed entrepreneurial ventures have in common.
Blinded By Passion
All entrepreneurs have something in common. That passion and fire to produce a product or service, that changes the landscape in which we live. After all, without this passion, big names won’t exist. Who knew Facebook would grow this big? Despite that, forgetting what the customer really wants is the biggest mistake startups really make. Passion for your product or service does not equate to the customer buying it from you. In the words of Robin Chase about ZipCar, “We spent too much money on the website and software before engaging with our first customers. This meant that part of our learning was undoing our first guesses.” – a clear indicator of not listening to your customers and being blinded by what you think they would want.
Rigidity About The Idea
The worst part of being a part of a startup is the constant amounts of change it goes through. I suppose if one had a child of their own, they’d realize that each element is a milestone achieved. With children, you could perhaps predict those milestones based on the number of books, research and informational material available online. With a startup, you can’t ever predict. And that is where the problem lies. All failed entrepreneurial ventures have this in common, not realizing that their business idea needs adaptability and flexibility. Rigidity on a business idea means you fail to change and grow when it really is needed!
Risk Vs. Return and Risk Vs. Loss
The biggest reason that startups and new entrepreneurs want to take big leaps is the promise of great returns. After all, we all believe in the adage that higher the risk, higher the return. This is the true nature of any successful entrepreneurial venture. However, as entrepreneurs, taking risks is mainly about finding the right mix of risks with progress. Non-calculated risks lead to great losses, and we have seen significant failures to realize that a calculated risk can lead to significant returns. On the flip side, entrepreneurs like to stay in their safe zone. This only leads to stunted growth and a feeling of failure tends to creep in.
No Focus On Financials
For some of us, the problem is underselling you or your great product/service. For others, it’s about forgetting how quickly and exponentially expenses grow. Pricing your product at a low rate, and not realizing how much you need to grow to cover your expenses, is the key reason for failed entrepreneurial ventures. Another reason is overestimating the idea of how many clients would simply sign up with you and avail your service. Key failure factor, not paying attention to the discounting factor that not all clients will want to pay that amount, and not correctly pricing your product to at least pay your expenses.
Clash Of The Titans
Perhaps the worst of all is to not cultivate the right team which can propel your startup forward. More often than not, entrepreneurs feel that they do not have the right capability and this self-esteem leads to landing with the first person you find who you think has the right skill set to make things work with you. Also, not finding the right team includes recruiting people who don’t fit into your agenda or culture of the company you want to build. As entrepreneurs, sometimes when budgets are tight and time is short, those people tend to be dragged along too who are not a good fit, but there’s not enough time or money to find a replacement. This leads to issues that propagate beyond the present, like misplaced value systems, bad cultural elements and in all, a lot of wasted time and misdirected effort, even antagonism by the rest of the team.
At Mushawar Consulting, we work with startups and small businesses to help them define effective strategies, coach them towards progress in the right direction towards the goals established, and help define the right steps forward to make their businesses to grow bigger. If you would like more details or would like to talk to us about your own startup, please feel free to drop a line to our team on firstname.lastname@example.org