Business mentor, angel investor and speaker Mark Lyttleton supports start-ups and early-stage companies, providing both paid and pro-bono business mentorship services to organisations operating in a range of different industries.
The road to building a successful company is not a simple journey, a fact underlined by a statistic published by Forbes suggesting that a staggering 90% of start-ups collapse. Business failure can be triggered by a variety of different factors. This article will explore potential stumbling blocks for early-stage companies, identifying the most common causes of start-up failure.
Lack of Focus
In the process of converting their promising idea into a profitable business, founders often find their attentions diverted by day-to-day operational factors, impairing their ability to focus on primary goals. Successful start-ups prioritise their efforts, maintaining focus on key objectives and ensuring that all team members keep rowing in the same direction. The embedded PDF provides information about business strategies and why they are so important for start-up companies.
Bad Bedfellows
VCs actively seek out founders who demonstrate the perfect blend of passion, leadership capabilities, ingenuity and resilience. However, even where they are fortunate enough to find such an individual, throughout the course of the start-up process numerous other players will contribute to the business’s success or downfall. Employees, investors and strategic partners all play critical roles in building the foundations of a business. A company can have a great vision, but without the right people, it is impossible to realise commercial success.
Lack of Consumer Engagement
Consumer engagement is an area where many early-stage companies fall flat. There are many possible scenarios where customers may lose interest in the products or services offered by a company. Perhaps the business has a poor sales strategy or the founder failed to undertake adequate market research. The embedded infographic takes a closer look at market research industry trends predicted for 2023.
Lack of Funding
As the leading cause of start-up failure, lack of funding can occur for a variety of different reasons. Perhaps sales were not as high as anticipated or business finances were mismanaged. In the early days of any venture, careful financial planning is crucial to keep the business afloat until it starts generating profits. If you wish to learn more about the importance of maintaining sufficient cashflow, the embedded video provides further details.
Poor Marketing Strategies
Every business boils down to two elements: bookkeeping and marketing. If a business excels at both, it will be a success. Many entrepreneurs are an expert at their craft, but when it comes to marketing they often fall short. It is for this reason that hiring out is often a prudent move, placing marketing campaigns in the hands of a trusted expert.