It’s guest post week again. Today we’re hearing from Delan Cooper of Consolidated Insurance Brokers who will give some advice about avoiding failure and finding success as you build your business. Here’s Delan:
The startup failure rate is as high as 90 percent. So why do startups fail? More importantly, why do startups fail and how can yours succeed? Before you launch your startup, you need to study the reasons for startup failure. A startup can fail for various reasons but there are some common ones cited for most failures:
Failing to Research the Market Personally
Do not depend on data floating all over the Internet, even if all that data is from reliable sources. Those studies may have been done in markets that are completely different from your market. Their context and timing may be different. You need to do your own research personally. Go out and talk to your prospective customers and clients. Do they really need the product or service you are planning to sell? Ask real prospective customers and not your friends. Ask them what type of problems they face with existing solutions. There should be compelling reasons for consumers to buy your product.
Running Out Of Money
So, you have done your research thoroughly and come to the conclusion that about $50,000 is sufficient to get you started. If that is so, then do not start your startup unless you have a minimum of $75,000. In fact, you should have at least $100,000. The reason is that you cannot foresee problems. You may be so much in love of your idea that you fail to see the problems ahead. The problem you encounter could be a very simple one and something completely unrelated to your venture. During the initial stages, you have to iterate a lot. You will need hard cash while you are at it. If you want to build a huge, high growth startup, you will eventually need money from other people to accelerate that growth, so it is better to build a startup that will excite investors to invest in your idea.
Not Selecting the Right People
Not choosing the right team is one of the biggest reasons why startups fail. You cannot do everything on your own. You need the right team to execute your ideas. The startup team includes not only employees but also the founding members. Choose your startup founder partners after careful evaluation. All of you should be on the same wavelength. It is a long haul so choose people who are comfortable with a startup venture. You need to select the right employees. Most young startup founders make mistakes in hiring employees. Ask for the help of HR professionals who have expertise in this field. Your startup success rate depends on the quality of your team.
You have found the gap in the industry. You can see your solution will benefit consumers and allow you to scale up your business model. However, do not underestimate the existing players. They will not move aside and let you take over the market. They will fight back and launch a better product than what you are offering. Once you launch your product, its flaws will be obvious. Someone will come up with a better idea. And remember, existing players have all the money, market share, and time to iterate their product and offer a better solution. However, do not let this fact hold you back from launching your startup. Patent and protect your ideas where possible. Be ready to iterate and improve your product.
You will rarely find this reason when studying why startups fail but your startup can fail if you do not take into account accidents, mistakes, and unknown catastrophes. The vehicle carrying your goods or the storage house where your goods are stored may suffer extensive damage due to an accident. An employee may file a harassment case and demand compensation. Your supplier or client may file for compensation for incurring losses due to your poor quality product, failure to deliver on time, or a wrong decision. Business insurance for startups is necessary to handle these situations. The average cost of business insurance is not very high. A small amount helps you protect your assets and business. Consult an insurance broker to learn more about business assets insurance policies.
Building a startup is more difficult than working as an employee. In your own startup, you are responsible for all actions and results. You will be held responsible even for the mistakes made by your employees and associated people. Consult a professional legal adviser, HR manager, accountant, and insurance broker before launching your startup. Yes, it is the right time to change the world with your idea but protect yourself against future problems as much as possible.
Delan Cooper is a writer with years of experience in marketing communication. He currently writes for Consolidated Insurance Brokers. He enjoys meeting new people and reading more books to get inspired for his own book. Connect with him on on Google+.