Every new business goes through various stages of growth, which determine its success. Often these stages can be fateful since their successful overcoming allows the project to continue its existence. As a rule, growth points are associated with problem areas that hinder the success of the company. Let’s look at common situations in which the founders fail to cope with difficulties that can lead to startup failure:
1. Lack of a clear division of responsibilities between founders
Oftentimes, people create a business with those with whom they are comfortable but do not take into account that such people must be useful and skilled. Of course, it’s important to find a person with whom you won’t have conflicts. However, the problem is that you need to distinguish friendship and business communication. Aspiring entrepreneurs often confuse them and choose friends or relatives with whom they seem to have built trusting relationships as partners.
The wrong choice of a business partner leads to a duplication of responsibilities. This, in turn, leads to conflicts and problems. This stage is perhaps the most defining factor in the success of a startup since it is usually resolved even before the business appears.
2. Lack of focus
The second biggest problem that can lead to a startup failure is the lack of focus in the business. As a rule, most projects are launched with limited investment. Therefore, founders have to solve many problems themselves with an acute lack of resources. Because of this, businessmen feel that they are doing nothing. It’s extremely important to abstract a little, relax, and try to act as rationally as possible, observing a very simple sequence of actions. The first thing you need to do is to identify which resources are limited since you won’t be able to solve all problems at once.
3. Lack of financial planning (business accounting)
Having a financial plan is one of the most important things. Financial planning and cash flow management will help you avoid failure and cash gap. Unfortunately, most newbie entrepreneurs don’t properly address this problem and risk to lose their businesses. Without proper attention to the details of your finances and the management of your money, your business might fail.
4. Lack of customer acquisition model
Knowing and planning how you will attract customers or users to your startup is already 50% of your success. Different business segments have their own specifics, and you should definitely learn and understand your model. If you have no answer to the question of where do you plan to get clients from, then this might lead to startup failure.
5. Team problems
The presence of team problems in a company oftentimes leads to the failure of the business. When a team is starting to develop a startup, then everyone is just starting to get used to each other, and this normal. Someone tries to dominate while someone just watches. As a result, this can lead to serious problems with establishing communication in the team between colleagues, which, in turn, negatively affects the company, and can even ruin it.