Even though it seems that we are living in the age of startups, the surprising truth is that a very large number of all new businesses fail. Some analysts estimate the failure rate of startups to be a shockingly high 90%. That’s a daunting figure for any budding entrepreneur, but there’s a lesson to be learned from these statistics.
Successful startups have some things in common, though these are not always well known. Their strategies for success include a mix of different factors.
5 Things Successful Startups do Better
The early years are the difficult ones for any startup and most startups fail to raise capital for the second year which is the beginning of their demise.
Let’s take a look at the five things successful startups do better and how they contribute to their success.
- They manage their finances efficiently: This may seem like a no-brainer, but a surprisingly large number of startups neglect this basic task. In fact, the leading cause of failure, in 29% of cases, is that they ran out of cash. Financial planning and budgeting can help businesses to weather the early years.
- They outsource operations that require expertise: Even though in small businesses everyone traditionally wear different hats, it’s getting harder to do in the world of rapidly changing technology. Especially in the world of IT, which is crucial to business success, it can be difficult for non-specialists to master the necessary skills and to keep up with new developments. Rohan Seth, owner of ScopeLeads says, “Successful startups recognize outsource operations that require special skills and knowledge, especially online expertise in areas of data management, cloud computing, SEO services, digital marketing, lead generation, web development, and more to focus more on the core of the business.”
- They utilize freelancersInstead of hiring full-time staff for specialized tasks, startups hire freelancers to fulfill tasks in which they have expertise. Not only does this help reduce the overhead, it also gives the business access to the best talents in the field.
- They listen to their customerCustomer feedback is essential for businesses that want to stay connected with their market. It lets them know what they’re doing right and in which direction to grow. One good example is the Chinese technology company OnePlus. Analysts attribute its success to a lively online community which has led to the development of the simplistic, user-friendly designs of phones that are dominating premium smartphone market especially in India, where it successfully captured 48% of the market.
- They know their market and industryPerhaps the biggest reason why startups fail is that they didn’t study their market carefully, and ended up offering products or services that no one wanted. Successful startups connect with their customers’ needs and track them as they change over time.
While a large percentage of new businesses fail within the first four years, there are some strategies that can help startups succeed. Knowing the do’s and don’ts can help entrepreneurs to plan and operate their businesses successfully.