3 potential disasters for your startup

I’m always wondering how startups like Apple, Amazon, Google, and Facebook turned into business juggernauts in our generation. It seems that these empires have created their own path to success, making them champions in the industry.

On the other side, startups like Kikko, Devver, ArsDigita, and RiotVine emerged as “bust-ups.” Perhaps, their paths took them to a different route. It was too late when they realized that the route was leading them to a dead end.

There could be tons of reasons why a startup fails, ranging from ineffective business models, lack of research, the lack or too much innovation, making wrong decisions – startups could be bound to all of these risks. Such risks push today’s business starters to try a different idea, or sometimes imitate what other successful startups have done, which doesn’t merit success. In fact, nine out of ten startups fail. Let’s explore some of the reasons why some startups were doomed to fail while others are successful.

1. Poorly structured business model

Brandon Uttley, CEO of Go For Launch, believes that a startup that employs a poor business model is a business bound to fail. An indication of a poor business model includes relying heavily on ads, selling the entrepreneur’s time, and investing too much money during the initial stages. On the other hand, a great business model is sustainable, profitable, ethical, and legal.

2. Lack of interest from the target audience

The truth is, even a perfect idea won’t sell if people don’t talk about it. Oftentimes, even if consumers will spread the word, they may still lose interest from time to time and startups will soon face the challenge of sustaining the growth. Sagar Babber, CEO of Snyxius, who has successfully turned his startup into a successful one and now serving clients in over 10 countries, “The key is to learn what works and doesn’t work during the process and don’t fall into the pit of trying to replicate what others are doing. Spot a problem a create a sustainable solution. For example, when we saw that there was no collaboration suite that fits the needs of small business, we created CollaborateClould which helps small business improve their productivity and processes through collaboration and workflows previously only available to corporations”.

3. Excessive and often misplaced passion

“Passion is the key to success,” as the famous cliché goes. While this may be true, entrepreneurs shouldn’t be blinded by this alone. There were several entrepreneurs who pitched at the popular TV show, Shark Tank, and while most of them never fall short of passion, there are certain signals that entrepreneurs should watch out for when deciding whether the business or their ideas are worth holding on for.

Graham Winfre mentioned in his article on Inc that, “Many entrepreneurs confuse passion with overly optimistic expectations.” In this case, passion becomes a delusion.

So what makes up successful businesses?

According to Neil Patel, cofounder of Crazy Egg, Hello Bar, and KISSmetrics, startups that are likely to succeed have these following characteristics:

• A product that meets a need
• The business doesn’t ignore anything
• The business grows fast
• The team can recover from the adversities of a startup life

Without these traits, Patel believes that startups are likely bound to fail. Yet, even if a startup has all these traits, there’s no guarantee that it will become an immediate success.

Conclusion

Despite the endless studies on why most startups fail, countless startups are still sprouting from different corners of the globe. When passion, great ideas that meet the market’s need, and well executed business plans meet, you’ve got yourself a recipe to combat most pitfalls that many failed startups have fallen for.

Image Credit: Rupert Colley