Can Your Startup Weather a Storm?

Successful people are quick to point at the significance of mindset, innovation, and effort, saying these three ingredients make up a considerable amount for a winning business recipe. However, the struggles faced by startups go beyond the individual level, and many factors start to come into play that is more than capable of crippling your business model when you’re not prepared. And of course, we aren’t trying to downplay the benefits of grit and willpower, but if that’s all you have to offer, then the market is sure to rear its ugly head and send its fair share of challenges.

Why Do Startups Fail?

With markets still suffering from the adverse effects of this pandemic, startups, in particular, are in more danger than ever because they can’t withstand this level of economic shock and instability. On top of this, startup businesses already carry inherent risks, and here are the following reasons why startups usually fail to begin with:

#1 Bad Planning

Number one on the list goes to Bad Planning.

Newbie entrepreneurs tend to think that they have the most innovative idea, product, or service to revolutionize the industry. And that, if they can just get off the ground running, investors will come chasing after them like crazy, and sales will follow soon after. As a result, the startup business is compromised because it wasn’t built upon a good foundation like a sound business plan, unidentified weak points, and a lack of business analysis. It could also come in the form of poor management, resulting in miscommunication and decreased efficiency.

#2 Zero Market

Number two on the list goes to Zero Market for the intended product or service.

We won’t deny that startups have the potential of harnessing an excellent product or service that can resolve many issues and be of use to numerous people. However, for a startup business to be successful, their product or service needs to sell, and it can’t achieve that without a market for them. So regardless of how much you innovate, if there is zero demand for it, your startup will go down a slippery slope towards inevitable failure.

#3 Competition

And the number three spot on the list goes to the competition.

Competition and rival brands are to be expected in business. And unless you successfully ride a wave of innovation right at the beginning, you’re bound to encounter fierce opposition from other startups. With that said, your rivals might offer better pricing, more value, and greater service, which can severely undermine the success of your business. Likewise, they could also have more capital, more liquid, and experts on their team, which puts you at a significant disadvantage.

How To Improve

Hope is not lost, though, and there are ways to improve your chances of getting it through the first five years of business operations. And while these require some technical backbone and investing a sufficient amount of time for research, these will help and put your startup business on the right track.

• Research Your Industry: Going back on the premise of market and demand, you need to research your industry and identify what you can provide. Are there specific skills you can offer at more competitive prices? Do you have a product that can increase productivity and efficiency? Or is there a particular problem that you can resolve right now? Spend an appropriate amount of time analyzing your industry and market.

• Understand Your Target Audience: Again, you want to sell your product or service, and the only way you’ll do that is by understanding your target audience. Find out what makes them click and what exactly they’re looking for. Go through your market segmentation and put yourself in the shoes of your target market.

Business Alternatives

The idea of starting your own business does not appeal to everyone, but that doesn’t mean there’s no other method of investing in companies and dipping your feet into management. So here are some alternatives you might want to consider if you’re looking to own a business:

#1 Partnership

Going off on your own means you bear all the risk and carry unlimited liability, and if you don’t like the sound of that, then maybe you can try getting into a partnership. This divides the risk and liability equally among all partners and gives you the combined capital contributions of everyone in the partnership. Plus, partnerships won’t require you to take an active role in managing the business, and everyone can offer their own unique skillsets to help the company thrive.

#2 Franchise

Startups always face the risk of not hitting it off, and if you don’t want to test out that level of uncertainty, you should consider getting a franchise. Franchising a famous juice bar or maybe a well-known fast-food chain lets you invest in a proven and profitable business model. It takes away the hassle of building a brand and establishing your products and gives you access to industry professionals ready to help you. Plus, if you have the capital to do so, you can own multiple branches and assign managers to do the heavy lifting, theoretically creating you a passive income stream.

#3 Purchase a Business

Lastly, if franchise and partnerships don’t suit your taste, and you still want to own a business yourself, consider purchasing an existing business. This gives you instant access to a profitable business model without establishing a foothold in the industry yourself.

Challenges Are Inevitable

Overall, the key takeaway from all this information is that challenges are inevitable in business. And if you want to succeed in this line of work, you need to consider all your alternatives and overcome the problems as they come.