Are you aware that only 50% of startups surpass the five-year mark? Each year, hundreds of startups are formed by enterprising entrepreneurs, but sadly, by the end of the fourth year, almost half of them have failed. Harvard Business School indicated the rate of failure for startups as a whopping 90% to 95%. According to a study by CB Insights, almost 70% of startups fail. In this tech-savvy era, most startup companies prefer firms such as Redwerk to outsource software development of small businesses.
These statistics are staggering, but they genuinely reflect the situation as it has been unfolding. Why are so many businesses failing?
For startups to have a chance at succeeding, there have to be clear and well-though strategies in place. While some startups experience success at first, it is not enough to maintain the momentum, and after a few years, the downward spiral begins. According to Ed Sappin, the CEO of Sappin Global Strategies, continued success is dependent on incorporating new and evolving strategies.
Let us look at techniques that you can use to ensure that your startup’s success is sustained.
Understand your Value Position
The value position must describe the road-map your startup will take to not only match the expectations of the clients but also to surpass them. A majority of startups lost the battle because they never had a well-articulated value proposition. Michael Skok, a Forbes contributor, stated that creating a well-thought-out value proposition, it is the first step towards building and maintaining a successful enterprise.
By failing to rally around an exceptional value proposition, startups will find it an uphill task interacting with potential sources of investment. They will also find it hard to generate a considerable flow of cash and rising to the top of the market.
Pinpoint Your Target Client Base
This aspect is crucial to building practical growth strategies. If you don’t understand your audience and what makes them tick, the chances of miscalculating are high. You might end up advancing the wrong marketing campaigns and repeat unwanted product advancement.
- How do Your Identify your Ideal Audience?
- Collect survey Information: This strategy can be done through research firms. You should also conduct your survey through newsletters and blast emails.
- Analyzing the Market Data: Check out your business rivals and note who they market to. Besides, identify why clients have chosen to shop from your competitor and the most loved products.
- Reach Out to Personal Networks: You can request your network, including family and friends, to use your services or products and give honest feedback.
Monitor Your Competitors
According to Gilles Bertrand, global commercial lead at the Shire, most startups fear to analyze their rivals because they might find out that their product is inferior as compared to the rivals. But the best plan is to face the truth and learn from your mistakes. Besides, you might find out that your competitors have already found a solution to your current problems.
Hire Smartly
Though finding suitable workers for your startup is not a walk in the park, it is crucial to the survival of your business. Are you aware that the cost of a wrong hire is comparable to at least a third of the employee’s salary in the first year? This is according to the U.S Department of Labor. Choosing unsuitable employees can wreak havoc to your profits and progress.
According to a 2013 survey by CareerBuilder targeting 6,000 HR experts and hiring managers, just one wrong hire can cost a company an upward of more than $50,000. This indicates that one lousy move when hiring can spell disaster to the startup.
Set Smart Business Goals
The most successful businesses make use of business goals to drive growth. To have a chance at building your startup, you can never underestimate the power of business goals. You have to set goals that are:
- Specific: Have specific and identifiable goals
- Achievable: Set targets that are in the realm of possibility
- Measurable: Have goals that you will be able to measure
- Time-based: All your goals should have an expiry period. Set goals and when you achieve them, set new ones
- Realistic: Be open to the fact that success might be achievable in unexpected measures
Scale Responsibly
Premature scaling can be avoided by ensuring that you spend wisely, give debts a wide berth, and limit overheads. Most startups fail because of spending lots of money before they have an established product-market fit. For all your software needs, go for reputable services providers that outsource software development to startups.
Companies like Redwerk have technical crews who have specialized in offering startups with resources such as IT outsourcing. These resources assist the startups in the execution of strategies and understanding all the costs related to the initial development going forward.