7 Reasons Startups Fail in their First 5 Years

Why does failure happen?

Is it the lack of experience? Not doing enough? Or is it simply because failure is like a bad guy trying to show his ugly self every time?

At one point in time, startups face series of failures; some too bad that it makes the business fold, others too challenging that it strengthens the will of the business owner. Irrespective of the kind of challenge, failure is an inevitable phase for startup owners.

According to the U.S Bureau of Labor Statistics, 20% of businesses fail in the first two years, and about half of every new business folds in the first five years. While there are a lot of things that lead to businesses folding up after facing an excruciating challenge, one of the major triggers is the inability to look past the challenge. Based on this, this article examines seven reasons startups fail in their first 5 years.

The fear of failure

It is quite funny that some of the fear of most startups is what often leads to their ruin. To succeed in any field in life you must be ready to fail. Failure is an inevitable phase in the journey into success. What is often celebrated as success is the product of the cumulative experience gathered during the failing stage. Failure is not like the bad guy trying to soil the reputation of a good girl, it is a learning phase that either teaches you or destroys you. How you respond determines whether or not you’ll remain a failure. This is an important point every startup must take into consideration. As much as no entrepreneur wants to fail, it is inevitable. 

However, facing failures is not easy. In fact, no one wants to be associated with failure. It requires every ounce of your will to get past the stage and learn. This is why most people who are afraid of failure never press further when they eventually fail. Experiencing the failure itself reinforce and increase their fear. When you condition your mind that the journey is going to be a rough one but the light will definitely shine at the end of the tunnel, failure would be an experience that should increase your knowledge of how business works. 

Lack of a business plan

If you fail to plan, you plan to fail. Every business, no matter the size, must have a business plan. Your plan should include your financial budget, the things you would be spending the money on, and how to spend the money. Mind you, your business plan does not necessarily have to be a giant book filled with both necessary and unnecessary details. Your plan could be as short as a one-page business plan. The key is to have something that can guide or direct your business decisions.

Be organized

Running a business is like being a circus ringmaster, at some points, you would be too overwhelmed. At other points, you feel you are indeed in charge. However, no matter how tasking running a business is, be organized. Have a daily to-do list and list your task according to the order of priority. Being organized helps to enhance your productivity.

Partial understanding of the market

One of the leading factors that trigger business failures is not fully understanding how the market works. The market is where your customers are. the essence of your business is to attract as many customers as you can. As such, understanding your market is key. Understand the customers you are building your business for, and understand the extent they desire your products. Also, understand what triggers their buying decision, and how your product can appeal to this trigger, and above all, find out how best to satisfy them.

Don't try to do everything yourself

There is a popular saying that “jack of all trades makes you the master of none.” Most business owners feel they understand everything that needs to be done and never bother to seek external advice, not even from business owners as themselves. This type of attitude reduces your growth pace. Don’t try to run your business yourself, wisdom and knowledge lie in the multiplicity of counsel. 

Don’t start hiring immediately you launch the business

By far, the biggest mistake a startup can make is hiring too soon. Hiring full-time staff for your business is like placing 50 liters of water on a 10 years old child. Two things would happen: the child either suffers a sprain or the child collapse. In the first few years of the business, understand that the business is not ready to take hard responsibilities like paying staff. Instead of full-time workers, part-time would do. 

Get on platforms where you can meet promising investors and get contracts

The right investor can catapult the growth of your business. This is why it is advisable to have a working strategy for your business. Get on platforms that can help you meet these investors. Some of them are B2B platforms like LinkedIn and Bixex. 

Bixex is a professional global platform designed to help business owners, entrepreneurs, freelancers, business professionals, and career experts to grow. The platform is designed for both local and professional connections between businesses. On Bixex, is the B2B Matchmaking section designed to bridge the gap between business to business deals, transactions, and collaboration. 

If you are a business owner, entrepreneur, or business expert and not yet on Bixex, what else are you waiting for?

Get started by downloading the app on Google or Apple Play Store or visit www.bixex.com

Bixex is simple, safe, and secure.