As an established entrepreneur and even as an aspiring startup CEO, you must plan your startup properly at the beginning. One of the best ways to do that effectively is to understand where other people treading the same footpaths have failed. Understanding people’s failures and consequently avoiding those pitfalls is key to your survival as a startup.
If you ask a lot of entrepreneurs, they will assure you that failure is a part of the game. In 2017, Mark Zuckerberg while giving a speech at Harvard told a number of aspiring entrepreneurs that they must be prepared to fail. “Facebook wasn’t the first thing I built. I also built chat systems and games. study tools and music players.” He went on to reel out the names of business people and creatives who have failed previously before winning. His whole lecture a testament to the fact that failure is indeed a cogent part of success.
The fact is that as an entrepreneur, you will fail at some things and win at some things. The idea of success as a startup is to limit your failures and scale up your win.
New startups are springing up in Lagos every day, Abuja is also seeing the steady growth of startups as the days go by. In fact, in a recent study by Qz.com, Nigeria is the top country in terms of African nations that received startup capital investments.
This shows the growth in the number of startups that we currently have in Nigeria. But, you have to ask yourself, how many of these startups actually go on to succeed in the market? The answer will surprise you-not too many.
There are a lot of statistics out there that will show you that many startups actually do not succeed. But these statistics as represented here are not meant to dissuade you from entrepreneurship or having your own startup.
Rather, it is aimed at encouraging startup owners and team members to understand the competitive market that they are entering and to help show them how they can avoid the errors that were committed by yesterday’s entrepreneurs.
According to Forbes in this post, about 90% of startups actually fail. That is a more scary figure when you break it down; nine out of ten startups do not succeed. In other words, just 10 out of a hundred startups get to succeed.
As scary as the figures may look, we have to focus on figuring out why these many startups fail instead of getting carried away by the numbers as we do many times. Startups may fail for various reasons. Locally here in Nigeria, the odds are automatically stacked against local entrepreneurs looking to build solutions.
The reason for this is not far-fetched: the environment does not encourage entrepreneurship as premium is placed on going to school and getting a job. More so, we do not have governmental help when it comes to encouraging entrepreneurs and giving tax breaks to startups in order to encourage them in market and engender their profits.
We have put together some of the major reasons why many startups fail in Nigeria:
Why Many Startups Fail: Planning For the Short Term Instead of Long Term.
As an entrepreneur looking to found a startup, one of the best things you can do is to think in the long term. Starting with your solutions, make sure that they are solving problems in the long term and that they are not just short term solutions.
Thinking in the short term is one of the major reasons why a huge number of startups have failed is that they planned for the short term instead of planning for the long term.
As an owner of a startup, you must realize that startups are built on patience. You can’t imagine that you have the best idea on the market so you have to go into the market as someone that is willing to play the long term game.
Many startup owners build companies that provides solution in the short term but after other players come into the market or after their solutions are no longer needed, they are left to hang dry with nowhere else to go.
As a startup founder, you also want to make sure that all your business relationships are being built for the long term as opposed to how failed startups have planned for the short term.
Long term planning includes hiring for the long term, getting long term business partnerships and building solutions that are for the long term.
Why Many Startups Fail: Poor Leadership and Weak Teams
One of the underlying factors that lead to the crash of many startups is when startups assemble weak teams and instill bad leadership in key positions.
All over Nigeria, it is characteristic to see startups that refuse to attract the best talents just because they don’t want to pay good salaries.
Other entrepreneurs refuse to motivate people working under them just because they know that there is a huge unemployment rate in Nigeria and that they can always hire someone else.
But the truth is that the next person that you are hiring might not have the talents of the former staff.
Moreover, it will take time before the new employee adjusts to your organization. Also, putting square pegs in round holes can drive your company to the ground faster than you can say “Jack Robinson”.
Why Many Startups Fail: Creating the Wrong Product or Solution.
As a startup, you can’t just build products and solutions that you like personally, you have to build products and solutions that are useful to the people.
Since you are not going to be building products and solutions for yourself, you have to take stock of what the people that your products and solutions are meant for like.
Creating the wrong products and solutions leads the rank as one of the biggest reasons that startups and entrepreneurs fail.
Why Many Startups Fail: Running Out of Money and Investments
A lot of Nigerian startups think that they have arrived as an an investor puts money into their business. To be quite honest, when you get investments, that’s when you be even more committed to working harder because your investors will demand profit.
To add to that point, you must realize that it is not every startup that should accept investors. If you are a startup that is generating steady revenue, there’s really no need to seek an investor.
The best idea will be to stick it out and grow your business without the added stress of answering to investors.
Many startups in Nigeria fail because they receive funding and spend a large share of the money on frivolities. This can only spell doom for your startup.
Sub-Par/Lack of Marketing
In today’s world, marketing is the bedrock upon which any brand stands on. So if you are looking to found a successful startup, marketing should be at the core of your considerations.
There are many products and services that have been pushed out of their industry due to poor or non-existent marketing.
If you consider the many reasons why many startups fail including the five we have listed above and you do your best to avoid the potholes, you might be on your way to excellence.