Thomas Edison once said, “Many of life's failures are people who did not realize how close they were to success when they gave up.”
When it comes to startups and entrepreneurs, the global failure figures are often reported as quite high. One study even declared that 90% of tech startups fail; we often hear about the challenges that startups face in the Arab world. But many startups success stories, like Facebook, Google and Maktoob, should make us seriously consider Edison’s quote and how many failures or seemingly bad ideas could actually be turned into success stories if only entrepreneurs paid attention to a few key considerations before it was too late.
For entrepreneurs that fear that failure is near, desperate and quick decisions could lead to the decline of your startup. Here are four questions that entrepreneurs on the verge of failure could ask themselves to try and make a change before throwing in the towel:
1. Does my business plan need to be revised?
In any lean startup, iteration is key. When defining your business plan, entrepreneurs can easily forget to set clear standards for measuring their company’s performance. This can lead a failure in one of the company’s areas to overshadow achievements and good signs in other areas. Monitoring performance indicators, such as profitability, conversion rates, website hits, and fans and followers on social media, among other metrics, can help you quickly discover your weaknesses to try and fix them before it is too late.
You might find yourself obliged to redefine your business plan, rethink or resituate your core offering, or rely on new strengths or team members that weren’t present when you wrote your initial business plan. But maintaining a flexible plan that is malleable enough to meet changing demands without losing sight of your core strengths can help you get or stay on track.
2. Do I lack knowledge or experience in an important facet of my business?
Many entrepreneurs launch their projects by focusing on an idea or using their strengths in a specific subject. There are numerous examples of app developers who only have a tech background and have no experience managing finances or a team, or business development professionals who have a great idea for a new app without the know-how of building one.
In any startup, a founder must have a broad range of knowledge, either themselves or via other cofounders, to cover all of the core pieces of the business before moving forward. Do you know how to manage accounts and a team, how to market your products and services, how to set sales and marketing strategies or even the language of your target consumers? If not, you can always try to build your knowledge about new subjects to fill in the gaps, either through courses or experience at other companies or projects.
3. Are my funding plans appropriate for my startup?
Funding needs and challenges are different for every startup; often, entrepreneurs realize that their project needs more money than originally anticipated. Building or introducing a product is never the final cost; creating a sustainable company takes time and constant revenues to fulfill employee salaries, iterate along market demands and cover overhead expenses.
If you feel that you are at the brink of a financial crisis that could cause your project to fail, it’s time to review your budget and find quick and less expensive solutions. In some cases, it may be useful to build partnerships with other companies to help distribute your products to new markets for instance or add new shared functions to your platform.
Try to focus your efforts and therefore your expenses on your core tasks; don’t hesitate to make tough decisions such as closing one of your physical points of sale and opening an e-store to display your products to a bigger number of clients, or even reducing the amount or hours of team members.
4. Why aren’t customers buying more of my products or services?
This is probably the most difficult question to answer, particularly in overcoming the pride that comes with pouring so many hours into a failing project. If it turns out that your products and services are not wanted or needed in the market, in the way you are delivering them, it may be time to re-evaluate your model. Be sure to accurately identify the reasons your startup is not performing by looking at the following points:
- Prices: Are my prices too high for what I offer? Or do low prices make my services seem cheap?
- Marketing: Does our target market know about us? Where does our audience learn about new products or make their purchasing decisions?
- Customers: Am I targeting the right people? Would other consumers find a better use for my offering? How can I expand my reach?
- Human resources: Do I have the right team members? Am I good at sales/marketing/development? Or do I need to look outside - or to other team members - for help?
After defining the reason (or reasons) why your clients don’t want to buy, you need to set specific and actionable solutions to tackle each challenge. It is critical to start or continue to talk with your clients to see what they actually want via social media, surveys and monitoring engagement habits.
In the face of the many challenges every startup faces, it’s always easiest to throw in the towel and move on. Sometimes you do need to know when to call it quits, but it’s also possible to turn a bad situation around. By being realistic about what you’re capable of and fighting to offer a more useful and quality product, you may be able to turn your idea into a real success.
Before you close up shop, make sure you’ve covered all your bases and offered the best product or service you possibly can.
Have you been able to turn a bad situation or seemingly impossible challenge around at your company? Share your experience in the comments section below.