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An independent survey showed that for every 10 businesses registered, only about 2 survive after 5 years.
If you desire to build your business to last, then you should be aware of business killers startups unconsciously walk into. Hereunder are 5 common business killers every startup should avoid.
Unclear target Customer
Who exactly will buy your product or services? Many start-Ups spend huge efforts and funds to create products or services with no clear customer in mind. A product or service that serves everyone is a myth. Though water is an essential commodity consumed by all, people will still differ on the consumption based on temperature, or container for instance. issues. The container it's sold with will certainly be a deal breaker for some and negligible for others. A product that targets to solve every problem for everybody will end up not being bought by anybody. It means it failed. Product failure is a major setback that could sink a lot of businesses. This is one huge reason many startup businesses fail.
Bad hiring
Not all employees have what it takes to work and make a difference in a start-Up environment. People suitable for start-Up businesses are for example not people who are only prepared to give the minimum. They are strong, self-motivated, and ready to go the extra mile. Making a bad hire as a start-Up may hurt and destabilize your business in many ways that could result in extinction. An entrepreneur should understand the labor demands of his business and make the right pick with all due diligence. Focusing only on a candidate's written resume may be misleading. Dig deeper. Wrong employees create wrong energy and results. Constant bad results often translate into a liquidated business.
Financial indiscipline
Many promising brands have gone into liquidation on account of financial mismanagement by the founders. A lot of start-ups cannot differentiate between personal cash and business cash. The profits to them are an opportunity for a social upgrade. So with every increase in profit, they feel they should move into a more befitting car or a bigger office complex and justify it as a "branding " effort. While a new car or bigger office is not intrinsically wrong, the timing makes all the difference. If you upgrade when it is illogical and detrimental to your business you would have set your business up for a major upheaval that might culminate in outright extinction. The financial allocation should be made to favor the vision and goals of the business and position it to be a more consolidated and competitive venture.
Overpriced products
Many people tend to associate price with quality. The assumption is that the higher the price the higher the quality. Start-Ups who want to be perceived as quality often use price as a tool to communicate quality. The truth, however, is that a lot of people who have a big budget would rather spend it on a known and tested brand than experiment with untested ones. This means that a high price without a name or status to back it may easily become counterproductive. Unless it's a franchise, a start-up may destroy its business by overpricing products or services. A high price without matching value and product pedigree is suicidal.
Bad promotion
Unless customers are aware of the existence of your products, even if it's the best in the market, they still may not buy them. A great product doesn't necessarily translate into great sales or profit. You have to spread the word about your products and the solutions it offers the customer. This requires creating a sound communication strategy backed up by y a realistic budget. Any business is like a cart, if you don't push, you will get nowhere. No one should announce your business to others more than you do. If you constantly ignore spreading the word about your business, the numbers will nose dive into bankruptcy. With a protracted underperformance, it might relapse into a place of permanent extinction.
Finally, as a start-up, you need to keep your eyes on the things that enhance brand performance and avoid the ones that slow the results.
