Why 90% of the startups fail?

Most entrepreneurs dream about building the next big thing. But do you know what the harsh reality is? 90% of startups fail. This is the harsh and bleak truth that an entrepreneur has to consider before they launch their business. Even a very optimistic entrepreneur needs a dose of reality every now and then.

Our experienced entrepreneurs have gathered a list of mistakes, prevention to which will help you build a successful startup. These are as follows;

When building a product, your only goal should be to provide a meaningful solution for your customers. Most founders fail to focus on this element. They think they have a brilliant idea and if they put enough features in the software, they will have customers buying the product. When entrepreneurs focus only on the building aspect, they fail to recognize one key aspect- customer satisfaction. As a result, the business never takes off and eventually fails to achieve milestones. This is why 90% of the startups fail.

The only way to move forward is to combine the building process with user research. By embracing feedback and criticism, you will be able to achieve enormous success and growth. Steve Blane, a top-tier entrepreneurial mastermind, devised a way to increase the startup success rate. One of the principles states that “there are no facts inside the building” which means that the only way you will be able to succeed is to talk to the users to move forward, even if it means doing things that do not scale.

Research conducted by Startup Genome suggests that solo founders take 3.6 times longer to outgrow the startup phase. This means that it is essential for the founders to hire the right core team as it plays a key role in understanding and executing the founder’s vision.

As entrepreneurs, we would advise you to work with at least one person from a different area of expertise to be a part of your team. Because you have experienced partners with experience from different disciplines, it makes executing your startup 100 times easier, long working hours more bearable, and someone who goes through lows and celebrate the highs together.

Premature scaling basically means going fast too soon. This one is quite tricky as it involves taking the right measures at the right time. According to Startup Genome research, 70% of the startups scale way too early. They even go as far as it can explain why 90% of startups fail. You shouldn’t be scaling if

1. You do not know your customer’s lifetime value
2. Your business is not repetitive, which means that you are not acquiring customers in a similar way.

The solution comes down in 3 stages:

1st stage: Product-solution fit. The first stage is the customer and problem identification. This means that you need to find the problem, see if your solution has enough customers will pay you to solve their problem.

2nd stage: Product-market fit. The second stage is to create an ideal product large enough for your startup growth. This means you need to test, validate, and determine the core features

3rd stage: Channel fit. The final stage is about lowering operating costs, increasing profit margin through optimization, and retaining customers. Once you lower your costs and determine your customers, you can step on the gas and scale-up.