Startup Failure

Top 5 Reasons that Lead to Start-ups Failing. Know How to Avoid Them

We all go through a phase in our lives where we think about starting a company with some partners. But, 90% of the time start-ups fail within the initial three years, leaving behind just a corpse of an idea which could have been turned into a brand if it would have been initiated carefully.

Start-ups have always been a base for establishing any industry. All the big brands that we constantly see and hear about today, were mere start-ups at their initial stage. They grew into a brand through hours of dedicated research, preparation, and execution that was brought out through an unbreakable bond of team members.

Today, we are going to talk about some reasons that lead to start-up failure and how to overcome them.

1. Ineligibility for Market Requirements

This is one of the most common reasons that lead a start-up to the doorsteps of failure. Shockingly, 42% of the start-ups lack market demand that prevents them from gaining the required traction they need to survive.

Remedy: Most of the start-ups are initiated as a plan between some partners that thought it as a need of the hour. A start-up is not just about opening a company and hoping it would become a brand. Rather, it requires a full-proof marketing strategy determining why it will be successful, till when it will stay successful and most importantly, how it will become successful. When a business plan is initiated with a proper marketing strategy, it turns out to be fruitful.

2. Competitiveness above the Limit:

We all understand that competition is one of the main elements required for the success of a brand. But, when the competition is cut-throat, it can turn out to be a reason for a start-up’s failure. Having a first mover’s advantage in any industry is always a good thing but when you already have some established names in the industry, a start-up can be pounded to the ground due to too much competition.

Remedy: While entering into an industry, it is always a wise decision to check the industry thoroughly and prepare a report on how would your brand emerge as a trend changer in an existing sea of great players. Thoroughly check all the aspects of the industry before you take the plunge.

3. Selection of the Wrong Team

Once you are done with the analysis of the market and have a check on the competition, it is now time to assess whether you have the right team to carry out the activities in the correct direction. A team of people who do not work as a contributing factor can lead any business towards failure.

Remedy: With a cohesive group of highly motivated, persistent, and diversely skilled people, who are united around a common vision,it can solve all the issues related to a start-up’s growth.

4. Business Model not Appropriate

For any start-up to work and foster, the business model must be planned accurately. Lack of monetization strategy, focus on single-channel are some of the reasons that lead start-up to failure.

Remedy: A sound business model with confirmed ROI is the most efficient method that one can select for a business to flourish.

5. Lack of adaptiveness with Latest Trends of Marketing

In the era of digital marketing, the basic strength of a start-up’s success is being adaptive to the latest trends in internet marketing. Old school marketing is effective up to one extent but they do have some limits that would manipulate the growth of a business.

Remedy: The best method to solve such a problem is to match the percentage of old school as well as internet marketing and utilize it to work in favor of the business. There are several modules involved in digital or internet marketing and the best method to use those modules is to hire a digital marketing agency that would lead you towards success through effective marketing strategies.

It is important for a start-up to look into these factors before taking their first step into entrepreneurship. While it is sometimes unavoidable for start-ups to escape all these situations, with proper action towards the path of an effective remedy can help eradicate all the obstacles on the road to success.

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Should a start-up hire freelancers?

Should a start-up hire freelancers?

You have your product up and about, and now the next step looms large — how do I scale quickly? The answer lies in hiring people. However, the next question that pops up is, should you hire freelancers to do it or share all tasks with your in-house team?

There is no right or wrong answer to this because it all depends on who you already have in your team and what stage of growth your company is at. However, there are some tips that can help you figure out whether or not you need freelancers. Because if done right, freelancers can be a great catalyst to your growth.

Do you know your priorities?

Is the work you need to hire freelancers for a priority? To understand that, you will need to figure out whether good content, or graphic design or digital marketing can actually move the needle in your favour. It’s okay to experiment, but at the end of the day, the projects need to bring the business some measurable value. It’s easy to get sidetracked by all the well-meaning suggestions to do podcasts, Instagram stories, video content, and everything ‘new-age’, but you’ve got to stay focused and not drown in never-ending ‘what-ifs’. Hiring freelancers for this can make it dangerous too because initially, it won’t cost too much, but if the content is not effective, it will all go to waste. So, don’t end up hiring too many freelancers who will only make lots of poor content. Instead, focus on rolling out one project, hire a few top-notch freelancers for the job and get the ball rolling. It’s a cliché, but it’s all about quality over quantity.

Can you afford a freelancer?

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While hiring a freelancer may be cheaper than getting on-board a full-time employee or an agency, you still do need to pay them. Especially if you want to hire freelancers who’ll promise quality work. You need to be transparent, consistent and reliable when it comes to paying them. You cannot also change the budget for a freelancer midway through the project. It’s their livelihood and not just a hobby. And please, don’t offer them ‘exposure’; it won’t pay their bills. They paid a hell lot to get educated, and it’s only fair they get compensated for their hard work with money.

Do you need to move quickly?

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As someone running a start-up, it’s understandable that you don’t have time to interview candidates, sort out paperwork or hand-hold them through their job. Here, hiring freelancers will prove useful as they will not only manage work on their own, they will also give you a platform to test all your creative ideas, and give you enough time to work on the gazillion other things more important for your business.

Is your team overworked?

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If you’re at the stage where your team is working 20 hours a day and are still unable to meet targets, it’s a good idea to unburden them a little by delegating that work to freelancers. This will also give your staff the opportunity to be more creative and even help you with strategy.

Make sure you have clarity and then brief right

Once you are clear in your head about hiring a freelancer, the next step is to get clarity on your project. The only way to do that is by understanding who your customer is, what they need, and whether this project will provide any value to them. Make sure you and your team are on the same page. If not, then maybe it’s not the right time to hire a freelancer.

Once you do get clarity and hire someone, make sure the brief is crystal clear. You can’t just tell the freelancer you need an infographic. You need to sit with them and make them understand how doing X, Y, Z project will help enhance brand awareness or bring revenue. That’s more likely to hit the mark and ensure that the freelancer gets it right. It’s also okay if you want the freelancer to take the ultimate creative decision, but then you cannot complain about how it doesn’t look the way you imagined it to be. Set the base expectation and then start working. Also, remember to factor in their time for research, and don’t rush them too much.

Think this through for the long run

While freelancing starts out as a short-term need, it does have the potential to transition to a full-time hire, especially if you end up finding the right person for the job.

With start-ups, deadlines are constantly moving and priorities keep changing. When you have a team with a common goal of getting things done, it’s easier to manage them and set your business on the path to growth. While freelancers are good in the beginning, they may end up falling behind when your business decides to go full throttle. Hence, remain open to the idea of offering them a full-time role when the need arises, define a work structure, and help them make the transition so they can deliver better results.

In the end, do remember that bad experiences can still happen. Any business owner or CEO has to make careful decisions about who they hire — whether freelancer or not. But for a start-up to grow, going the freelancer way is a good call. When done correctly, the positives will far outweigh the negatives and ultimately even get more revenue for your company.