A hundred years ago, a combination of politics and economic factors made it nearly impossible for new entrepreneurs to transform their ideas into actual companies. The rich stayed rich and the poor stayed poor, but thankfully, our government quickly realized that the core of job creation and economic stability was entrepreneurship and set out ground rules to encourage innovation. Canada now has fantastic protection rights, unions, networking events, and grants to help put new business ideas into motion. So why is it that so many start ups still tend to fail? Here are the top reasons that some ideas become million dollar companies, and some ideas turn out to be failures.
The number one reason why a company falls apart is that the demand for the product is simply not there. Over 42% of start ups fail because the product doesn’t solve a consumer’s problem (and ultimately improve his/her life). It is extremely important for a start up to research the potential market of this product and even do some market testing before moving forward with their official launch. Many start ups try to skip this step, which can cause a large investment of money and time to go to waste.
Lack in Marketing Investments
Business owners often underestimate the power of clearly thought out marketing. Marketing isn’t just commercials and coupons. Marketing makes sure your entire brand is developed, your customers are aware that your products exist, and sets price strategies to maximize profits while expanding market share. Think of Uber and Lyft for example. You probably haven’t even heard about Lyft before, but they were actually the first ones to come up with the idea of ride sharing. Uber stole their idea and developed an excellent marketing strategy using a referral system, online advertisement, and more. This allowed Uber to dominate the market and eliminate Lyft as a competitor.
Once a product/service has been tested and approved, it’s crucial to develop a branding to increase customer awareness, and marketing strategy that will permit your product to take over the market fast enough to prevent new competitors from arising. There are many different ways to proceed with marketing strategies, and as a business owner, it is your job to find out how the best way to market your business is. Outsourcing your department to a Marketing Specialist is also a solution if that is not your specialty.
Having your business boom over night sounds like a dream, doesn’t it? Wrong. Unless you were expecting and planning for it for the past few months, it’s a recipe for disaster. Is your staff big enough to handle the increased demand? Is your staff equipped with enough experts who can help hire, train, and manage this new growing staff? Do you have the production line and/or service location capabilities to keep up with the demand? All of these aspects can create total chaos in your current organization, as well as prevent a high number of sales and leave a bad impression on your business. Start ups need to have a set growth management plan and be ready to expand quickly if the demand arises. Business owners, especially in start ups, have a hard time delegating tasks to other people because they want everything to be done by them. Instead, they should invest their time into training the right people to do those things for them. Once a company’s core team members know how to run the different departments, the owner can concentrate on growing his/her company. Another great way help you manage your growing business is to get a virtual assistant. Virtual assistants can cost as little as 6$ an hour and answer your calls and emails, organize your schedule and folders, write up your memos and meetings, and create your office documents.
Would you start treating your friends like garbage once they’ve been convinced that you can be an asset to their life? Absolutely not (or at least I hope you don’t…). Now you need to live up to that expectation, and this is the major key in creating a long-term relationship vs. a short-term relationship. A business should be seen the same way in relations to their clientele. A good customer service hotline, a follow up call, and a user-friendly website with adequate information will help your customer feeling satisfied following their purchase. Word of mouth marketing is the best way to get new long-term clients!