So many ignored mistakes can kill and bury your startup, no matter how innovative your ideas are or how enterprising the founder is.
Especially in the tech industry, where the ability to develop new ideas is critical to success, good ideas don’t always turn into profitable businesses.
Many founders fail despite having outstanding and inventive solutions to issues that are market worthy.
For entrepreneurs, especially those who had put so much time, effort, and personal money into the company, this might be a challenging and disappointing experience.
The failure of startups in Africa is due to several causes. Some are outside the founders’ and team members’ control, while others are not.
Nowadays, startups are vigorously fighting with one another to establish their foothold in the global marketplace.
Here are 5 things that can kill and bury your startup fast.
1. Business model with flaws
A business model is essentially a road map that ensures the smooth operation of a company.
It establishes the client base and determines how products or services can be modified to deliver value to these customers to maximise revenue.
Unfortunately, even with fantastic ideas and value propositions, many firms fail in this area. A flawed business model will kill and bury any startup sooner or later.
A business model can be defective in a variety of ways. A company’s model is faulty if its value propositions produce more costs than revenue.
In other words, if a firm spends more money to offer value than it receives in revenue, it is on its way down.
Opay, which spent a lot of money producing cheaper products and services for various of its businesses, including ride-hailing, food delivery, and fintech services, is a well-known example.
The super app spent a lot more money to provide value for an extended period. After the Lagos State Government banned motorcycles, most of the company’s verticals could not survive.
A company’s model might also be problematic if suitable channels for reaching and delivering value to the consumer base are not established.
It makes no difference how amazing a solution is if people are unaware of it and unable to use it.
Several business analysts could create efficient models for businesses. Founders would be wise to make use of their services.
2. Making an effort to please everyone
One of the primary reasons most businesses fail is that they take every tip and piece of advise far too seriously.
Have you ever heard the expression “too many cooks spoil the soup”? When an entrepreneur pays attention to everyone, this is exactly what happens.
It is essential to stay focused on the main objective and goal. Once you’ve made a plan, stick to it and don’t change it.
This could lead to unfavourable outcomes that aren’t beneficial to the startup.
What matters in a startup is the team and their shared choice in the direction of the brand’s growth.
It’s important to listen to everyone, but ultimately, do what you and your team believe is best for the company.
Outcompeted simply implies that the competition has overwhelmed you and driven you out of business.
While it is good to be unconcerned about the competition, ignoring them is also a terrible business practice.
This is because once a market embraces a tech product or service, nothing prevents other innovators from swooping in to fill the void it has created.
Often, these newcomers arrive with better and more creative ways of performing the old things and a large sum of money, and it’s just a matter of time before they take over the space.
4. There is no market demand
As surprising as it may seem, because you’d think people going into business would be confident in their market, the lack of a market is the leading cause of startup failure.
Many digital innovators are well-known for developing answers to problems that they perceive to be urgent rather than those that the market believes to be so.
It’s not uncommon to hear stories of founders who explored various ideas before settling on the one that works.
Rather than wasting time coding and designing algorithms for perceived problems, founders should devote more time, effort, and money to market research and analysis.
Many legal apps are languishing in Play stores because their creators created what they thought were real-world solutions, but the market disagrees.
5. Inadequate resources and failure to raise more funds
We’ve all heard a lot about this, haven’t we? Finance will always be the backbone of every endeavour.
It is challenging to develop an idea until it materialises as a physical firm – ready to enter the market – without adequate capital. And this contributed to the failure of 38 per cent of the companies analysed.
Even after creating a market-ready minimum viable product, maintaining and scaling it would necessitate additional money.
While many startups bootstrap their businesses from concept to early-stage, external funding is nearly always required at some point. However, many startups never make it to that point.