Statistics collected by Bloomberg indicate that 8 out of every ten startups end up collapsing before the start of their third year. That is a whopping 80% of startups that crash and burn when they are still in their infancy.
As entrepreneurs, we should be asking ourselves why so many startup businesses fail. If you wish to turn your next startup into a flourishing success, you should be learning from the amount of failing startups.
What do these businesses do or fail to do that contributes to their untimely closure?
In this article, I share the five common pitfalls that are usually the death knell of many startups:
Failing to keep in touch with their customers
What usually happens when a businessman has a brilliant idea that he or she thinks is the next big thing in the enterprise world?
Many entrepreneurs retreat into a shell. They hibernate in their work caves and get busy implementing their ideas.
This is the wrong approach to business.
You need to get out there and talk to your potential customers. Not through 140 character tweets but a sincere dialogue that seeks to understand what your customers’ passions, fears and strengths are.
Holding a dialogue with your customers is the first key to business success.
Lacking real differentiation in the market
How unique is your business idea?
One of the reasons why your startup will fail is if you are trying to do what everyone else in the market is doing.
Since most of the business do not have real value that they are adding to the market, they end up closing their doors and wondering what went amiss.
Failure to communicate your unique value proposition clearly
Communication is an art and science. Unfortunately, if you do not know how to communicate your business goals and mission clearly, it doesn’t matter how brilliant your business idea is, it will end up with the 80% that never celebrate their third year anniversary.
The above three mark the most common pitfalls that lead to the crumble of many startups. Now that you know the reasons why businesses fail, I trust that you can come up with ways to salvage yours from joining the colossal statistics.