May 20, 2015
In the hopes that you can learn from others’ mistakes, CB Insights, as reported by INC., asked 101 failed start-ups what was their undoing. While you may think there are a multitude of reasons why businesses fail, of those interviewed, a resounding 71% indicated that their stumbling block could be attributed to one of the following two issues:
1. 42% Found That There Was No Market Need For Their Product Or Service
This happens time and time again. If you aren’t filling a void in the market or filling a need, it’s very hard to convince consumers to purchase your product. Loving what you do and having passion for your business and your products can only take you so far. You have to understand who your target consumers are and what is driving them to purchase products like yours. Then you need to figure out how to convince them to start purchasing yours in lieu of a competitor’s product. And all of that, as I have a tendency to hammer home on this site, comes from understanding your consumers and their wants, needs, desires, and frustrations.
2. 29% Ran Out Of Cash
No matter how great your idea, it’s hard to entrepreneurs to get funding to start and run their businesses. And, sadly, it’s even harder if you’re a food entrepreneur. That’s why taking the time to develop cash forecasts – not just for when you start your business but for every year you’re in operation – are so important. They can give you and idea of when you anticipate your business will be flush with cash and when it might be struggling and you can proactively plan accordingly to try to weather those dry spells without your business going under.