Whether you’re an aspiring entrepreneur or an investor looking to launch a new business, you’ve probably heard that building a successful startup can be difficult, and that failing within the first five years is a probable outcome. So just how many startups are coming into existence each day, and how many are failing every day worldwide?
According to a statement given to Moyak by Dr Paul Reynolds, Director of the Research Institute at Global Entrepreneurship Center, an estimated 130,000 startups are being launched every day in countries around the world. That averages out to several startups being born every few seconds. While that growth rate is indeed fast, keep in mind that about 120,000 companies cease trading every day as well. That means that, on a daily basis, there are almost as many businesses going under as there are being launched.
It’s no secret that the majority of startups have a tough road ahead, but what secrets are the minority using keep their businesses alive and thriving? Well, to start with, here are five tips anyone can use to ensure their startup has the best chance of success in any industry:
1. Make it a Team Effort
This is a common cause behind many startup failures – the owner and founder tries to go it alone, until the bitter end. Sometimes websites or companies can be taken to the next level through the work of a lone entrepreneur, but in the majority of cases, businesses run by one person have a lower chance of success than those operated by a board of directors or a group of people who share common goals. When you make the company’s success a team effort, you involve the livelihood and financial futures of multiple individuals who will then work to ensure the company’s success, while also removing most of the burdensome tasks from the owner and founder, thereby allowing them to achieve more with their time.
2. Select a Profitable Niche
Out of all of the most common reasons why startups fail, choosing the wrong niche is probably the most difficult to overcome. This is something that should be done in the planning phase as part of the initial business model. In case you’re not familiar with the term, a niche can be a sector within an industry, a specific topic or problem that needs addressing or solving, or a subcategory of a sector. A good niche will be specific enough to allow you to create your own space in the industry, rather than forcing you into competition with an established company from the beginning.
3. Make it Unique
Once you’ve chosen the right niche, you then need to make sure you have something unique to offer at an appealing value, at least in comparison to similar providers. What is it about your product/service that stands out? Whether it’s the addition of a few special features or a lower price point than the competition’s, there has to be something that makes your product or service a superior buying decision from the perspective of any prospect.
4. Stick to the Plan
This is why thorough and exhaustive planning is so critical in any endeavour. How can anyone logically stick to a plan that suddenly seems to be full of holes? This is where many startups run into trouble – their original business plan, or at least some components of it, stop making sense or start to look like bad decisions, so they deviate from the plan as they go along, rather than drawing up a new comprehensive plan to addresses the deficiencies of the original business model. Fortunately, if you haven’t yet launched your startup, you’re in the beneficial position of being able to avoid all of the aforementioned hassle by creating a better business plan from the start.
5. Keep Expenses Minimal
Finally, there’s no sense in draining your company of capital and cash flow just to have access to bigger, better equipment, office space, utilities, or any other luxuries that might not yet be necessary. Expenses need to be limited based on a set percentage of the company’s income. For example, try allocating no more than 15% of the company’s income to basic operating expenses, not including investments and inventory. Of course, the exact figure should vary greatly for each business, depending on the unique funding situation and goals of the startup.
Failure is Becoming Overrated
In closing, we’d like to attack the increasingly common mindset that failure leads to success. While it is true that making mistakes can train you to recognize such problems and avoid them in the future, why not try to spot potential mistakes in foresight instead of hindsight? With that said, don’t beat yourself up over mistakes, but don’t defeat yourself either by having a lackadaisical attitude towards failure.