So, you’ve made it over the hump of deciding whether or not you want to start your own business. You’ve probably saved up for years, fantasized about potential ideas and thought of how your business will make money and grow. But have you nailed down the specifics? Have you set a financial plan in place that can give your startup the boost it needs to succeed? Have you started searching for professionals whose skills would be invaluable in your industry? These are all important things to think about if you want your startup to be stable and secure in whatever industry you choose to go into. Keep reading to learn more about startups and creating a long-term plan that will work for your new business.
Understand why startups fail
You’ve heard that the majority of startups fail, so what better place to start than understanding why that happens and learning to prevent the mistakes that others have made in the past? These are just some of the main reasons startups fail:
No need/too much competition
Sure, a little friendly competition is a good thing, but in the business world, it’s only a good thing if both companies are able to profit and differentiate themselves. Otherwise, one is bound to fail. Before you begin your company, you need to understand, first of all, who your competitors will be and second of all, you need to understand them as if they were your own business.
To understand who your competitors are, you need to understand the difference between a direct competitor and an indirect competitor. A direct competitor is someone who is selling the same product as you. An indirect competitor is someone who is selling a similar product to you who may have an overlap in the consumer base. For example, if you sell toothbrushes, your direct competitors would be people who also sell toothbrushes. Your indirect competitors might be companies selling mouthwash, floss, or electric toothbrushes. These companies also sell oral hygiene products and may be taking potential customers from you.
However, that’s not all there is to competition. It’s also important to understand your competition’s target area and specifics of the product they are selling. It’s okay to go into a market where there is competition, but you have to have a plan as to how you will succeed with reputable plans already in place. Is your product going to be cheaper? Will it work better? Does it have an extra feature? These are all questions you should ask yourself.
When you’re running a startup, you have to be willing to sell or complete services for a loss. That’s not to say that you need to force yourself and your employees onto the streets, but you can’t expect to be making a lot of money early on. Remember that the early stages of your business should be spent fostering a trusting relationship between you and customers so that they return, and most importantly, tell their friends about the wonderful service/product they’ve received.
Not following up
Something many business owners never think about is following up with their customers after they’ve invested in your company. This is a lot more important than it sounds because you need honest feedback on how your company is seen in the marketplace. You should create a brief survey that can be distributed through email to all of your customers. On this survey, you should ask about the customer’s general experience with your company, the employees, or services. You should also ask if they are likely to return or how likely they will be to choose you over a competitor.
These are just a few of the main reasons why startups fail. Startups can fail for a variety of reasons like a lack of funds, lack of focus, employee burnout and much more. However, they usually fail due to a combination of these factors, especially if the owner is new to entrepreneurship. Don’t get discouraged though! Most successful business owners have had at least one startup fail.
Contact a business consultant
One of the best things an entrepreneur can do for themselves is to contact an expert business consultant who has seen the highs and lows of business formation and knows what makes them successful. At FRF Consulting, our highest priority is to see your business dreams come to fruition and we’ll use our business expertise and a decade worth of experience to make that happen. We truly believe that if there’s a will, there’s a way. And when you speak with an expert business consultant, you’re taking the first steps to successful business formation and developing long-term goals that will lead to growth and financial security for years to come. Contact our consultants at FRF Consulting today to get started.