As a webpreneur, I know about failure. I’ve made mistakes, pretty stupid ones. At the same time, though, I’ve been fortunate enough to succeed a few times, too. Nine out of ten internet startups get fails. This is a hard and bleak truth, but one that you’d do well to meditate on. Entrepreneurs may even want to write their failure post-mortem before they launch their business.
Why Internet startups get fails today – Reasons
While the idea of working from home sounds like an ideal solution, most are just not preparing. Many of these unhappy people will just quit their jobs and jump right into the first internet marketing business they find with no preparation, no knowledge of what they are doing, no education, and no hope of success. Failure is their only option and they are not even aware of it.
According to many sources, more than 90% (Ninety percent) of all Internet business start-ups end in failure within the first 120 (one hundred twenty) days. And that number is all too accurate: NINETY PERCENT!
Don silver explains a number of reasons:
1. Many don’t know the statistical probabilities they face.
2. Many don’t see themselves as being part of the failures or they wouldn’t leap.
3. Many are talked into things they are unprepared for.
4. Many don’t know the basic tenant of – “If you fail to plan, then you plan to fail.”
People think that an internet business just means that they no longer have to get up and go to work. They think they can simply work when they feel like it and still make a good living. They do not understand that any business requires them to work hard and sometimes work long hours.
Let’s go and dive into the reasons for failure so we could avoid it:
Reason 1: Wrong Ideas About Online Businesses
Most of the people that start an online business should not actually start a business since they’re often not fully prepared. When referring to the Internet, they simply do not know how it works or they believe that the online world is the Mecca of success without work. Always remember the following:
Successful Online Marketers Have Self-Discipline
You cannot read a book that tells you that you can work 6 hours per week and become successful overnight. You want to work as much as possible and this automatically means that you have to be disciplined.
There Is No Auto-Pilot Online Business Success Blueprint
Many think that they can easily be successful online and that they will be able to get a lot of sales simply by being present online. That is definitely not the case. You want to think about everything associated with online business from analyzing the target audience to getting professional website development work done. In order to be successful, you want to basically build your own blueprint since auto-pilot success is just a myth.
Always remember the fact that online business success will NOT happen overnight. A lot of time and work will be needed for true success.
Reason 2: Running out of Cash
A fourth major reason that startups fail is because they ran out of cash. A key job of the CEO is to understand how much cash is left and whether that will carry the company to a milestone that can lead to a successful financing, or to cash flow positive.
What frequently goes wrong, and leads to a company running out of cash, and unable to raise more, is that management failed to achieve the next milestone before cash ran out. Many times it is still possible to raise cash, but the valuation will be significantly lower.
According to Steve Hogan, who runs a startup turn-around shop called Tech-Rx, says companies with founded by one person—that is, no partners—are most likely to fail. He ranks product demand, or a lack thereof, second. The existence of a co-founder helps avoid many of the reasons cited at the bottom of the CB Insights chart, he says, including disharmony, poor marketing, and the wrong team.
Running out of cash does not cause a startup’s failure, Hogan says—it’s merely a symptom of another issue. Excluding instances of “stupid spending” or the inability to raise capital in the first place, startups tend to run out of cash when a CEO has overlooked all other indicators of failure. “Unfortunately, sometimes it’s the only ‘symptom’ that the leadership sees,” he says.
Reason 3: Product Problems
Another reason that companies fail is that they fail to develop a product that meets the market need. This can either be due to simple execution. Or it can be a far more strategic problem, which is a failure to achieve Product/Market fit.
Reason 4: Not Having the Right Team
Yet another reason why 23% startups fail is not having the right team. An article published at Entrepreneur.com reveals that forming the right team is perhaps the first critical step to building a sustainable company. No matter you’ve spent through your nose for a creative logo design, a fancy website and an extra-luxe office space, nothing can save your startup company from falling flat if you don’t have a great team. Remember, only an effective team can quickly make adjustments and quickly pivot to the ever-changing market conditions. A right team can bring large rewards to startup founders. Therefore, it makes sense invest in a good team to steer your startup towards success.
Reason 5: No Concept of Target Market
Whenever startups are formed, there must be a burning need to have a specific user in mind. Identifying your ideal target market is the cornerstone to survive in the crowd of businesses emerging every day. Not having an ideal customer profile is one of the worst mistakes that startups usually make, and this acts as a hindrance in customer acquisition. Drawing the right customers to your business constitutes more than half of the job to acquire more customers. Decide what your ideal audience looks like. Thereafter, conduct some research on their interests and preferences on various mediums of interaction.
From Cbinsight post:
If you found any other reason for online startup failure, please share with us through the comment box below.
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