Top Reasons Startup Businesses FAIL

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A new study came out showing why startup businesses fail. Let me show you an image showing the top reasons and then let's discuss the main reasons...

Ran Out Of Cash/Failed To Raise New Capital - 38%

The top reasons has been the top reason going back 100 years... ran out of money! 

I've started and helped others start a new business many times. Bluntly, it always costs more than you think it will. ALWAYS! I'd recommend that after a careful analysis of what your costs will be to double that amount if not triple it.

That's because as all new business owners find out there are expenses they didn't even consider and/or they find out they don't have a key skillset so they have to either contract it out or purchase courses to learn the skill.

Commonly new business owners spend money foolishly buying things they think they need but don't.

Then, once you've got your business put together, you need to start marketing to bring in leads and sales. Here again new business owners way under estimate the marketing costs.

I'm just going to tell you, the money will go faster than you think it will. Spend wisely!

No Market Need - 35%

This is one of the most common problems... People aren't interested in buying what you're offering.

Any good course you'd purchase on building a home business will tell you the importance of doing a market analysis to determine the need for your product. You must make sure there's a market for what you're selling and that people are willing to spend money on your product.

But sometimes it has nothing to do with your product and everything to do with your inability to properly market it. This brings me to...

Get Out-Competed (Out-Marketed) - 20%

I just wrote an article addressing this very point... "Marketing Is The Lifeline To ANY Business!". Marketing is a skillset many new business owners lack. The problem is, without good marketing you get left in the dust of your competitors.

Too blunt?

It's reality.

Marketing really is the lifeline to any business.

There are two parts to marketing...

1. The marketing strategy, and

2. The marketing piece (copywriting).

It takes both pieces to create a successful marketing campaign to include building your marketing assets to support your marketing efforts. In my opinion from 34 years of experience, I'd put the copywriting as the most important part. This is because I've screwed up on the strategy but because I had a solid marketing piece which was compelling I was still successful.

On the other hand I've put together the perfect marketing strategy but bombed because the marketing piece didn't compel the prospect to take an action.

The good news is you have two options for putting the marketing in place at your company...

1. Buy courses and learn marketing and copywriting. Me being me, this is what I would do because these two skills are skills which will serve you for the rest of your life and will be the key to your creating many successes throughout your life.

2. Contract this out to others to handle. While many have done this, you lose some control to a key part of your business and the key to your business being successful. I would still recommend your taking some courses on marketing so you can have intelligent conversations with the person putting your marketing in place and making sure the marketing being put in place is the right options for your specific business.

Don't under estimate how important marketing is.

Flawed Business Model - 19%

Your business model is how you design your marketing strategies, sales process and customer service as the three most common business models. 

Most people go into business having no real understand of marketing or business optimization. Let me share a common scenario. Let's say both businesses do the same thing and have the same products.

Business 1. Sells one product to new clients. They only focus on new clients.

Business 2. Understands marketing so after a client buys a product they offer an up-sell opportunity or two, and then they cross-sell complementary products. Then they send up-sell and cross-sell opportunities to their clients throughout the year.

Obviously Business 2 is going to create a larger revenue per sale and a larger lifetime value per client. What a newbie doesn't realize is it's 80 times easier to sell a product to an existing client than to a new client and it's 80% less costly which means they make more profits on selling to existing clients.

They also don't understand the "lifetime value of a client" and how to increase it.

Here you can see how a bad business model for sales and marketing can be devastating to a business.

The Foundation To Marketing

We are just finishing up on a course that's foundational to marketing. It covers many key and foundational marketing strategies and information to help any business do a far better job of marketing their business.

Link: Foundation To Marketing 

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