According to the most recent data available from the U.S. Census Bureau, around 453,000 businesses got their start in 2014. While a lot can change within three years, it’s safe to assume that the number of annual startups remains relatively unchanged.
If you are thinking about starting up a business or you are a startup, you’ve probably heard the less than promising statistics about new businesses. Many experts say that 9 out of 10 startups will fail. While there’s a lot of truth behind this statistic, don’t let it prevent you from trying.
There are many reasons as to why startups fail, and there are ways to reduce your chances of becoming a sad statistic. Want to beat the odds? Here are some tips for avoiding failure.
Stay Confident But Humble
Believe it or not, over 80 percent of startups fail due to arrogance. The business world is competitive, and it can be a hard to find your place, so it’s natural (and encouraged) to be confident.
Being overconfident can keep you from doubting yourself and can help you ignore the naysayers. Confidence can help you succeed and grow. Startups fail when confidence become unbridled and turns into the company that doesn’t need guidance or help from anyone else.
Staying grounded and knowing when to be humble can keep you alive and well.
Always Have a Plan
Having a solid plan may sound like a “no brainer” but more than half of startups fail because they don’t have a plan. From the beginning they sort of planned as they went and they reached a point where they had no money leftover and the whole operation was falling apart.
Your first business plan is likely to look a lot different a month or two in, but a business plan is a must. You need to evaluate it often and make changes that allow for growth and change.
Evaluate Your Costs
Even if you consider yourself to be good with money, your costs can be one of your biggest issues (particularly during the first year when they are most limited). You only have so much money to spend on the product, marketing, and other aspects of your business.
Money can be tough, and you’re likely to even lose some before you make a profit, but online tools can help you from losing any (or too much). Take an ROI Calculator, for example. If you invest some money in marketing, which you should, you want to make sure that your Return on Investment (ROI) is good.
If you’re not good with money (or just too busy), utilize all the online tools you can find and hire someone who knows how to navigate through some of the trickiest money-related parts of a startup.
Startups are hard, and they can take everything out of you. Approximately 30 percent of startups fail because there’s an imbalance in personal and business life. Burnout is a prominent issue, and business owners just don’t feel the passion anymore. Find a balance and stay passionate about your startup.