We are currently living in very strange times. However, they can be very exciting for entrepreneurs because consumer habits are evolving as a result of the pandemic. Nonetheless, only a small percentage of new businesses will actually achieve the goals that they set out to accomplish.
There are several reasons why most startups will fail to make it to their fifth birthday. Here are six that every business owner should know before launching their ventures.
#1. They Aren’t Passionate Enough
There are close to six million businesses in the UK. Merchant Savvy – research shows that over 99% are classified as SMEs. However, that figure is likely to grow in 2021 for several reasons. An increasing number of employees have lost their jobs as a result of the pandemic while others are won over by seeing success stories online. While the desire is there, it counts for very little if it isn’t matched by passion.
Sadly, the vast majority will fall victim to chasing money. While it would be crazy to ignore that it is the reason for wanting to start a business, trying to capitalise on a current trend will backfire. Your lack of knowledge and passion for the subject will shine through. In turn, potential clients will continue to take their custom elsewhere. Conversely, if you work on something you love, there will be an audience who love it too.
Besides, when you love the work, it will make the tough moments feel far brighter. We argue this is the most important lacking ingredient as to why most startups will fail.
#2. They Don’t Have Funds
Advanced technology and communication have made it possible to start a business on a shoestring budget. Nonetheless, it would be foolish to think that you won’t need some capital along the way. After all, registering the company is only a formality. For the venture to succeed, you’ll need to source and sell products or services. Even when choosing something like dropshipping, fundraising is vital.
Funding may come from many sources, such as personal savings or family investments. However, the harsh reality is that business bank loans will be harder to get than before. On a brighter note, private investors are still available while crowdfunding is a great option. Aside from growing funds, you can leverage success from an investors insight or build a client base. Either way, it can give you a bunk up in business.
While avoiding financial waste is crucial, those that try to avoid spending will suffer.
#3. They Don’t Stand Out
The marketplace is packed with microbusinesses and SMEs across all industries. So, while there is a niche for your products, winning the audience won’t be easy. They say that imitation is the sincerest form of flattery, but it won’t win clients. Experts at Branding & Creative Design Agency – Naked Ideas® will ensure that you do. They achieve this by ensuring that your venture resonates with potential clients.
Consumers can interact with hundreds, if not thousands, of brands every single day. Therefore, it’s imperative that yours makes a great and lasting impression. It can take seven interactions for a client to consider making a purchase. The key is to ensure that you are fresh in their minds when they need the products you sell. Likewise, it needs to achieve this in a cost-effective way. Generating £100k in sales is pointless if it costs £200k in ads.
When the SME stands out as a professional, unique, and exciting brand, results will show.
#4. They Fail To Resonate
Visibility is a crucial first step in the consumer journey. However, a lot of SMEs focus on social media followings rather than actual sales. For your business to have any hopes of long-term success, it needs to win clients over and gain their loyalty. When the CLV – Customer Lifetime Value is higher, the benefits are huge. It makes it easier to forecast potential revenue while also opening the door to expansion.
There is a defined path to conversion that covers three stages – awareness, consideration, and action. A dedicated plan that is designed specifically with those targets in mind will have a far better shot at sustained success. This is because it works on human elements, such as installing a sense of urgency. It also ensures that the firm can focus on building an emotional bond and developing long-term custom relationships.
Human connections remain the heartbeat of business, even for digital interactions.
#5. They Don’t Have The Right Support
There’s nothing more exciting than having your Eureka moment. When you do, though, it’s only natural that you want to take control of the entire business model. It’s the only way to know that every aspect is under control, right? Wrong. And more importantly, we all have strengths and weaknesses. Teaming up with the right partners allows you to focus on yours and leverage success from theirs. It is the best solution by far.
Similarly, you must support yourself with a winning team. As an SME, taking on lots of permanent on-site staff is daunting. It might be impossible under the current circumstances due to working from home. Thankfully, the use of agency staff and remote-based employees can work wonders. When connected through the right tech Apps and comms systems, productivity can actually improve.
Besides, if you don’t have the right people on your side, you’ll never take a day off.
#6. They Aren’t Currently Relevant
Finally, any new business entering the market in 2021 must accept the situation. The arena looks vastly different to how it did 18 months ago. While the fundamentals are the same, many aspects of running a company should be adapted. The approach to recruitment and team management is a clear example. This can be extended to holding video conferences with clients, backers, and more.
Furthermore, you must acknowledge that consumer habits have changed. They research businesses and read testimonials. They analyse the market for different options before committing to a sale. They value the consumer experience and level of client support. Frankly, if you try to run a business using a blueprint from a few years ago, it will be destined to fail. Many companies will do this, which gives yours a chance to do better.
When you do, the company won’t only survive, it will actively thrive. So now you know why most startups will fail, go forth and multiply!