What Is the Key to Startup Success?

Many people try to start their own business. It’s an attractive dream. You get to be your own boss, do what you love and you might even make a lot of money. The passion, enthusiasm and excitement are all there at the beginning. People work hard and pour hours into their own fledgling businesses. But in the end, most fail. According to a FastCompany article in 2012, 75% of startups fail. After 5 years, 50% have failed. Over 70% fail after 10 years. These are gloomy numbers, especially if you’re one of those people who dreams of beginning their own business. 

So what’s the trick? How can you make the top 25%? 

Fortunately, there is some advice to follow and, after many years of guiding and advising startup companies, Henner Diekmann of Diekmann Associates has learned many tricks of the trade. 

First, let’s take a look at what you should try to avoid if you’re starting up a new business. 

Management is a key element of any new business. There are plenty of mistakes to be made here. But the three most common mistakes are:

1.    Poor Focus – Perhaps there are too many projects or there are too many things going on at once. These prevent the business from focusing its energies on a main objective and achieving it, resulting in failure.

2.    Lack of Motivation – Yes, most people start a business precisely because they’re motivated. However, not everyone is ready for the great amount of commitment a business requires. So, what started out as great motivation can easily turn into low commitment and little passion.

3.    Being Too Proud – Some people are so proud of their business and their efforts that they fail to see a storm brewing. Whether it is financial or otherwise, failing to see or listen to others who try to warn of impending disaster can result in the business’s demise.

On a more general level, businesses fail because of major problems in the company. Obviously, management is also responsible for these problems, but it’s more difficult to pinpoint a precise error. A series of errors may produce these issues that result in company failure. What are the top 3 most common issues?

1.    No Market – No one will buy the product or service because there’s no need for it.

2.    Ran out of Money – When funding comes to a dead-end, so does the company.

3.    Wrong Team – People are the key players in any business. Without the right combination of skills, knowledge and chemistry on your team, the company won’t take flight.

Now, we’ll address the brighter side. Some companies do make it past these failures and soar on to success. What do these startups do differently? Successful companies also follow some patterns that you can learn from. Here are a few main points:

Commitment

Startups that succeed create a plan for their business and strive to make it happen. Rather than constantly changing the plan, they are committed to their goals and work passionately towards achieving them.

Flexibility

Commitment is important, but so is flexibility, to a degree. Startups and their founders need to be willing to make adjustments to the plan without drastically changing their end goals. Remember the issue of being too proud to see a problem? This is where flexibility comes in. Founders must be willing to see what’s happening in the company and adjust to meet new challenges and changing conditions.

Use Business Principles

Many people who startup their own company aren’t business experts. That doesn’t mean they can’t begin successful businesses though. Instead, it means that they must seek expertise and mentorship to make sure they’re covering their bases. For example, if you’re an engineer, artist or other expert outside the business arena, you may want to seek business advice when beginning your company to ensure that your financial ducks are all in a row and procedures are in place to protect the business. Bring on an accountant early in your business’s life to ensure you’re meeting the bottom line.

Plans

Finally, successful startups are strong in planning goals. Raise enough funding for each stage of the plan. You need to know approximately how long it will take for you to reach your goals and use intermediate milestones in between so you are constantly able to evaluate your progress.

Beginning a successful startup is no easy task, that’s certain, but it’s not impossible either. By studying and carefully creating a business plan, committing to it, but adjusting as you go along and seeking mentorship, you can work towards adding your business to the list of successful startup companies. 

Have you begun your own startup company? Are you thinking about it? Tell us about your biggest challenge or fear in the comments below.