Don’t make your startup a people problem
It is a fact — most startups fail. There is no way of hiding this, this is the harsh reality. Many come crushing down out of various reasons, so what are these and are there other underlying factors?
From analysis that CB Insights and Autopsy Research made on 368 failed startups, the most common reasons for failures are
1. Running out of money (37.0%)
2. No financing or investor interest (31.0%)
3. Lack of business model or plan (25.5%)
Of course, having cash is crucial, either you generate enough from customers as revenue, or you get it from investors, if you are still in the phase of working to get paying customers.
No investor interest might be that your idea is not interesting enough, or your ambitions are not big enough or they are big but fully unrealistic. We can go on, there can be many underlying reasons for this.
The lack of business model, I have encountered many startups and entrepreneurs who have not spent any or sufficient time on how to realize the idea. To love your business I think this is elementary and extremely critical.
Having a business model or plan requires a process to think of what problem you are solving, why the customers wants to buy your product or service, and actually why you are better at this than the competition. Answering these questions and some more, I believe you have better chances of getting interest and potential funding. But there is still a way to go.
One thing I started to think about is what could be the underlying factors for these top three reasons for failure? What about the people behind the startup, the co-founders? Well, according to professor Noam Wasserman at Harvard Business School, 65% of startups fail due to people problems. This might well be the cause for why the startup lacks a business plan, there is no investor interest and they run out of money.
This should strongly indicate that the co-founders behind the startup need to put efforts behind building the plan. My device is to love your business, not the product.
So a survey Wilbur Labs did with 156 founders recommended that in order to avoid the startup failure they should research before launch (29.5%) and have a stronger business plan (22.4%).
Be ready to learn! Ensure that you have the right co-founder(s) with you, who have the right complimentary skills, shares the vision and with whom you know you can work well with. Avoid the people problem, as many startup companies might have a team of founders not ready to put in the work hours, show their grit and come out as winners.
Listen to what feedback you get from users especially. Are you addressing the right issues, how can you solve the pain points. That means you have to be agile, find ways to pivot.
In the same survey, 75% of founders said that pivoting had been successful and the three most used pivot strategies were:
- Improve/change your business plan (59.3%)
- Improve existing product (40.7%)
- Launch new product (39.5%)
In my opinion, being agile and ready to pivot comes down to the people. It is not just about being technically savvy, today I strongly suggest to also have emotional intelligence engrained in your leadership. Be ready to learn, be open minded. Solving challenging problems requires a diverse team that collectively can apply critical thinking and solve the big mysteries.
Get ready to pivoting, learn from your mistakes and build a successful company!
The data is taken from the sources:
https://www.wilburlabs.com/blueprints/why-startups-fail
Read more about how my startup is scaling-up and under www.rocsole.com.
