Unfortunately, the statistics are inexorable. 50% of new enterprises do not survive the first 5 years after opening, and 96% of projects do not live to see their tenth anniversary. But is it possible to somehow predict in advance which group your startup will be in: among long-livers or among those who will not last a year?
This is an important issue, because no one wants to spend their time and money on a futile project. A successful entrepreneur pointed to 5 signs that indicate that the startup will not last a year.
Investors are not interested in supporting your idea.
Investor funds will allow you to grow your business faster than you can do it with your own money. With the availability of financing, you immediately have the opportunity to invest in advertising, hire first-class specialists, and purchase the necessary software and equipment. All this at the start gives your business a tangible advantage over competitors.
If you are struggling to attract investor interest but fail, there is a serious problem. You can, of course, admit the likelihood that you do not know how to present your ideas, but most likely your idea is not at all as good as you think. As a rule, investors are experienced businessmen, so they are quickly able to assess the prospects of an idea.
You do not have a plan to test the product and its adaptation to the market
Success is not friends with stubborn and unyielding businessmen. The farther, the faster the environment changes: markets, competitors, consumers and their needs. For this reason, thinking over the launch of your project, you need to carefully plan product testing, its adaptation to changing needs, optimization, customer interaction, and competitive analysis. The environment will only change faster and faster, only the business that is ready to change with the world and adapt to it will survive and be successful. That is what Jeff Bezos said: “We need to always be guided by the future. The world is changing around you, what used to be a tailwind can now be a headwind. You have to accept this and figure out what to do because complaining is not a strategy. ”
Your business does not solve the market problem in a new way
The presence of competition in the market, even very large, does not mean that your business is doomed to failure. In fact, competition is a good thing for an entrepreneur, it is an indicator of the demand for your product or service. But if your business model is an exact copy of what you already have, and many businessmen are building the exact same project, you are unlikely to be successful.
The question that you should ask yourself first of all and an infinite number of times is: “What will make people buy from me, not from my competitor?” Therefore, it is very important to pay attention to a preliminary analysis of competitors, to identify what they are doing wrong or not quite as customers would like, where they are not working out in order to build their competitive advantage on this.
Consider a simple example. Let's say you want to enter the market for green cleaning products. This is a trend that is becoming increasingly popular. More and more people worry about their health and the environment. But there are quite a few manufacturers in this market, so if you just start to produce and try to sell cleaning products, it will be very difficult.But you just need to think about the fact that conscious consumers are concerned not only with the contents of the package, but also what will happen next with this package, whether it is recycled or not, and it is better that it does not exist at all, you will find that the manufacturers who sell funds in the buyer's packaging or offer to use recycled packaging, almost none.
If you study the history of successful businesses, you will find that many entrepreneurs won just by discovering and eliminating the shortcomings of competitors.
Math is very important.
Often a good business is just math. If you want to make money, you have to spend money. It is important to carefully analyze the numbers: overhead, market value, potential profit.
If, for example, you find a gap between how much you plan to produce and how much you can actually sell, then you will either have to look for a new market where you can sell your product at a high price, or start producing something less expensive .
Unfortunately, few entrepreneurs take the time to carefully analyze their project budget in advance, before launch. And this very quickly leads them to financial collapse.
Your business is lagging behind in a technological sense
The world is constantly changing. And the fastest way this happens is in the field of technology. Just think, it took us only 20 years to switch from dial-up Internet to high-speed communication, available in every mobile phone. And if you expect your business to exist for several years, you need to be prepared to constantly adapt to technological changes. For example, if earlier it was just enough to open a store, now it’s important to have a presence on the Internet, social networks, mobile applications, as people are sitting at a computer less and less and prefer to do most operations using their phone.
How long will your project live?
Will your business work the second year? It depends on the same 5 criteria listed above. You need to sit down and test your project on these basic parameters every year. If you find that some aspect has begun to sag, you need to spend time and think about how you can eliminate the identified shortcomings. Your business must be of interest to potential investors, product testing and optimization should be part of the annual plan, your proposal should always help to solve consumer problems in a new way. Be sure to analyze the budget, do not avoid technological progress, and actively introduce innovations. If you do all this, then you will have much more chances to build a successful business that will pay off and will bring you profit for many years.