12 reasons why 50% of small businesses fail within their first 5 years
by Joe · 38 things on Twos
- Ran out of money (38%)
- Everything is more expensive than you think and mistakes increase costs
- If you don't bring in money quick enough, you could run out before you planned
- No market need (35%)
- Quit trying to solve your problem and actually ask what the need is
- Knowing what your customer actually needs will help increase your chance of success substantially
- And not what they say they need, but what they actually need
- Got out competed (20%)
- Don't obsess, but don't ignore
- It's easy to go from one extreme to another. You can lean from your competitor, but if you obsess over them it makes it hard to innovate
- Flawed business model (19%)
- There is typically a reason the industry runs a certain way
- Check your blind spots
- Regulatory/legal issues (18%)
- Do your research before you launch so you don't waste your time
- Pricing/cost issues (15%)
- Pricing is an art and a science
- Too high and no one will buy. Too low and you'll never cover your costs
- Be ruthless in your modeling and test demand at different price levels
- Not the right team (14%)
- A team with diverse skills is important early in a company
- Don't hire for skills, but for potential
- Good people can do a lot of different things
- Product mistimed (10%)
- So many great product have failed because people weren't ready for it.
- Poor product (8%)
- It's important to always reflect back on the customer's felt need, not what they say they want or what you think they want
- Infighting among team/investors (7%)
- Building your team of employees and investors is one of the most important things you can do.
- Clearly define roles and expectations
- Pivoting or not pivoting (6%)
- It's easy to fall in love with your idea and pivot too slowly
- Or work so frantically that you abandon things too quickly
- Always record your logic and test your decisions before pivoting or not
- Burnout or lack of passion (5%)
- It's important to create natural breaks and notice the signs of burnout before you get there
- Source