Not all projects are destined to go a long way. Many of them fail right at the start, some encounter problems while already working…
As you can understand from the title, below we’ll delve into why startups fail, what you need to consider avoiding it and making it to the finish line (and ideally to break even).
First, about the reasons
Many reasons for failure are trivial. Everyone knows about them, but somehow forgets to analyse and apply them to their own startup even before launch.
Top 10 leading reasons (the higher the more popular):
- No one needs the idea — investors or potential clients are not interested in it. Or the conditions have changed during the work on the project, and the relevance of the idea has simply disappeared.
- No money. No money — no project, only the author of the idea will work for the idea alone.
- Problems with the team — disagreements, something not shared, misunderstood each other, and so on.
- Too much competition. Yes, competitors are never dormant, in an age when everything has been invented, you need to keep your hand on the pulse and be faster or more efficient than others — otherwise you will get shot out of the saddle.
- Incorrect pricing or too high costs. This problem directly correlates to the lack of a business model mentioned below.
- The product was unsuccessful. Users didn’t adopt it or didn’t understand it, which is also not uncommon.
- The balance of income and expenses has not been calculated — the author of the idea has not developed and justified the business model, has not foreseen possible risks. As a result, debit and credit did not match.
- Poor marketing, because of which the project failed to gain a sufficient audience. Advertising is the engine of business, nowadays, it is not enough just to put prices below market, you have to tell about yourself, your advantages, and be able to sell your product. No sales — no project.
- Incorrect work with clients. Clients are those who bring money for development. If you don’t hear your main investors, i.e., clients, you can face a lot of problems and completely lose the project.
- Late entry into the market. Part of the problem overlaps with high competition. Time is money, and the one who starts earlier or does things faster wins. While you are working out small features, someone else will simply take all your customers, which means you will have nothing left — a stitch in time saves nine.
Less popular, but no less important reasons for startup failures include:
- Loss of focus. You should always be aware of where you are going and why. Yes, things can change a lot in the process, but if you take a wrong turn, the project can be completely lost.
- Disagreements with investors. It’s simple here: who pays the piper calls the tune. But sometimes it happens that the author’s ideas cease to coincide with the ideas of those on whose money the team works.
- Loss of the core or idea — in other words, if the thing that made the project come into being disappears, it falls apart.
- Lack of spark/involvement.
- Wrong geography. Yes, you have to think about where to open a project. It is a whole set of related problems — how close the team members are to the office, whether there are no language barriers, what the demand for your product is in the chosen country, region, city, etc.
- Reduced interest from investors. In many ways, it is related to the problem of lack of money, but in this case, the investor may have money, but he simply does not want to spend it on your project anymore.
- Improper project legalization and legal complexities. Any project should be analysed comprehensively, including consideration of its legality and the absence of any restrictions or encumbrances.
- The need for connections. Even in very developed countries, it is sometimes necessary to put pressure on someone to get the necessary publicity for a project or to continue its development, it all depends on the niche and market conditions.
- Moral, emotional and even professional burnout; how to minimize this effect we have looked at earlier in the article ‘How to Reduce Employee Burnout with Organizational Strategies’.
- Abandonment of an idea. Yes, it sometimes happens like this — there was an idea, it seemed reasonable and worthy of attention, effort, time, and at some point it all went away.
In addition to the reasons mentioned above, business projects can fail because:
- inappropriate working hours/schedule. Many teams can go through fire, water, and brass tacks, but are not tested by remote work, which is stressful in itself.
- a wrong development strategy. It is best to start with a minimal working model.
- assessment of possibilities, detached from reality.
- lack of experience. There is an interesting idea: to become a real manager, you need to recruit a team, start a project, screw up the project, disperse the team, reassemble, finish the project… and so on until enlightenment comes.
- poor resource planning. It is very similar to improper focus, when the team grabs everything at once, but not what is needed.
- improper staff selection. Here again you require experience or a strictly scientific approach, or, better still, a balance between both.
What to do to keep your project on track
Firstly, any idea requires justification. Therefore, before you launch a project, you need to think it through and calculate everything: what you will earn, how soon you will reach payback, what variants of events are possible, what can affect the result, what it will cost you to give up certain features, whether you will be able to promptly replace suppliers, and much more.
All of this can be predicted with some degree of certainty. You should always focus on the ideal scenario, but be sure to keep an escape route in mind.
Secondly, it is good to have relevant experience. If you don’t have it, you need to tighten up your core knowledge and practice, and model everything even more thoroughly. A scientific approach always wins, even if you need to build a team of pros from scratch to run your project. It’s either experience or scientific reasoning!
Thirdly, you should not try to realize all the conceived features and functions at once. You need an MVP model, i.e., you need to make a minimum viable product first. This approach will allow you to move more quickly from theory to practice — to analyse real demand, to try out the chosen marketing strategy and so on, but most importantly, it will save resources and money, and therefore potential losses in case of complete or partial failure.
Everything you need can be implemented later on the existing work product.
To facilitate project planning, task setting and control, and to ensure a unified system of communication and operational notifications, specialized software such as Projecto should be used.
With Projecto, you get a ready-made infrastructure that is easily scalable and customisable, no installations on user workstations are required. All plans and tasks will always be in your pocket or browser.
Projecto easily adapts to the transition from an MVP model to a full-fledged working product.
To explore the full capabilities of the system, take advantage of the demo mode. It’s completely free of charge, and you can order a free ‘custom’ test installation for one month, followed by a seamless transition to a full working version.
