It’s a well-known fact among startup owners that the odds are against them. Most startups fail within the first few years. However, it is possible to catch the signs of failure early and react appropriately. What follows is a guide for how to counteract startup failure.
One of the first things you should do when worrying signs about your startup’s future begin appearing is go back to your business plan, which is the blueprint for your entire vision of the company. Read over it carefully, note the goals you originally set for your company and try and determine why those goals have not been met. If you did not have a business plan drafted when you started your company, now is the time to do so. It will be especially helpful or even necessary if you need to take out a business loan.
Restructuring is a viable option to save a floundering startup. In fact, it’s very likely a fledgling company will need course correction at some point in its early years. It becomes a problem, however, when there are signs that change is needed and the entrepreneur ignores those signs. There are many different ways to restructure based on your needs, but the core idea is to evaluate what elements of your business are not working and then take active steps to fix them.
Financial trouble is one of the main causes of startup failure. Unfortunately, financial trouble can manifest quickly when a massive expense hits, such as taxes that were unplanned for or an emergency purchase made out of necessity. Startup owners should not leave the entire management of their finances to an accountant. An accountant or other financial professional can help an entrepreneur keep their business financially stable, but business owners must have some understanding of finances to make smart financial decisions for the company. To this end, entrepreneurs should educate themselves on the basics of financial topics. Perhaps most importantly, owners need to compile and review financials every month so they always have a clear picture of their company’s financial health.
Your startup may be experiencing problems because of a security breach. Security breaches, whether cyber or physical, are serious violations that can cause customers to lose faith in a company. In response, business owners should take measures to increase security at the company. Immediately install better security features, such as an intrusion prevention system. Issue a sincere apology that outlines how you are addressing the issue.
A “build it and they will come” approach is usually not very effective for startups. Instead, entrepreneurs must aggressively market their product or service. Customers simply cannot buy a product when they don’t know it exists, and your company must have a viable marketing strategy for not only identifying your target audience but also reaching it. This may require a more specific selection of your target audience or shifting your target audience altogether. It might be time to hire a dedicated marketing manager or an outside marketing firm if you do not already have one. They can assess your situation, analyze what you have already attempted and formulate a comprehensive marketing strategy specifically for your product.
If there’s nothing you can do to save your startup, sometimes the best course of action is to close the company and try again. Entrepreneurs should not let their dreams of owning a business die because they failed. No successful business person has succeeded in everything. The key is to learn from your mistakes and prevent them from happening next time. Consider bringing your most talented employees with you when you move on to your next venture.
Facing the failure of your startup can be an emotionally draining, painful experience. However, if you react quickly and effectively, you may be able to save the business. With any luck, the above advice will help you turn the situation around.
by: Kevin Faber