Tom Eisenmann in his book “Why Start-ups fail?” identifies recurring patterns as to why almost two-thirds of start-ups come to nothing. Many venture capitalists simplify the problem by either blaming the opportunities that the start-ups are targeting or the lack of skill in the founders.
A great idea may fail to take off if it is not backed by strong stake holders like employees, strategic partners, investors etc. The inexperience or inadequacies of a founder can be compensated by the advice and guidance of investors and other seasoned management members. A good business idea attracts good talent which provides a strong foundation for any business.
Also, testing the feasibility of the business idea is of paramount importance. To save valuable time and capital, it is important to conduct market research to gauge the customers’ needs so that entrepreneurs don’t jump the gun on their product. An effective strategy is to conduct competitor analysis to understand the market and the various players in the field. It gives an insight into the strengths and weaknesses of the rival products in the market.
Once the segment has been identified, it is important to incorporate customer feedback to design their product conforming more closely with the market need. Successive prototype iterations and testing is essential to develop a promising product addressing the target market’s needs. Presenting the prototype or sample product in the hands of a test segment is essential to uncover any issues.
A successful entrepreneur is more often than not, a fast mover- they are quick to react and move fast to capture opportunity. Passion and persistence steer them through setbacks and crises. Also, they must know how to deploy their resources judiciously to avoid liquidity problems during the crucial growth phase.
It is inevitable that many start-ups though promising, might not make it but it is worthwhile to learn from the mistakes plaguing them so as to avoid falling in the same trap and making your entrepreneurial journey more productive.