What makes a business successful
Research suggests that 50% of all new businesses fail within the first 5 years, so why do half of start-ups never succeed?
The first interesting fact is that people who have had previous failed attempts at starting up new businesses have a higher success rate than first-timers. 20% of people who have failed at a previous business are more likely to succeed with their next venture compared to just 18% of first-time entrepreneurs.
This is because there are certain qualities that successful entrepreneurs have; tenacity, the ability to persevere, and the ability to learn fast. Failure often teaches more than success, and struggle leads to growth.
One typical reason first-time entrepreneurs fail while their second time around, previously unsuccessful counterparts go on to succeed is their desire to scale too fast. Ambition, drive, excitement, passion, and the desire to be successful are all great qualities to have in an entrepreneur, but they must be controlled. Often when left unchecked, these great qualities can themselves be the downfall of a potential great new venture.
Targets and visions are set too high, the amount of runway needed is often underestimated, and the confidence in the market immediately adopting the product or service is over-estimated. Timing is everything. It often takes someone with the experience of failure to understand that things don’t happen in our time-frame. And this is where an experienced advisor is necessary. Someone who can come in, who is not part of the company culture and can reign back on the leash when it is needed.
Starting up a new company is exciting, launching a new product is exciting, developing a new technology or service is exciting. And it is this excitement that often gets in the way of the reality of launching a new product or service and getting your first customer or client on the books. Too much time is spent perfecting, and not enough in planning.
Start-ups should be well aware of the Minimum Viable Product (MVP) concept, and should look to launch this well before any thing is perfected. All businesses should also have a well defined value-proposition. That is a key summery of the service you are offering and the benefits to the end-user.
Another overlooked aspect is business marketing. As new businesses focus on product or service development they forget to plan and detail their route-to-market. What does the customer journey look like? What routes and steps do prospects go through to becoming new customers? What high growth segments exist within your target market? This is most important.
You can have a great product, the best, but unless you have put as much effort into planning how to acquire new customers as you have in developing the end-user experience, then your chances of succeeding are significantly reduced.