An analysis by PWC UK has found that startups accounted for 46% of total company and solvencies in 2024. While this might seem like quite a high figure, it’s actually the lowest percentage in a decade by quite a considerable margin. According to Archimedia accounts, over 5% of startups fail in their fair share, and just over a third of startups make it to five years.
So, for those who want to step out and hit the ground running with a new business, it pays to stop and take stock of what issues have gone before and those who have gone before you, so you can learn from their mistakes and not fall at the first hurdle, rendering you just another failed statistic.
Curious as to what actually causes new startups to fail? Read on to find out.
Running Before You Can Walk
Many startups take the phrase “hit the ground running” literally. While you do want to be successful from the very first day, you need to be successful before your first day of trading. The reality is that many startups are trying to do too much too soon, and without the basics in place, this can be absolutely disastrous.
Rushing to hire, rushing to market, rushing through pricing, and rushing through all of the steps that make a successful business will leave you up the creek without a paddle and no way back.
Avoid this common pitfall by thinking of your business a bit like the popular Couch to 5K training program. Just as this program helps you gradually build up your running stamina, you should start your business by getting the basics right, finding your groove, and then building up to bigger and better as time goes on.
Neglecting Marketing
Marketing is essential for any business. According to the Founder’s Forum Group, poor marketing contributes to 14% of startup failures. A white paper produced by Solid Water and NOWNIC found that 69% of 183 UK venture capital firms see poor marketing as a limit to a portfolio company’s ability to scale. Neglecting marketing can significantly hinder your business’s growth potential and even lead to its failure.
One of the key pillars for your business? Then, you need to make sure that you are implementing an effective marketing strategy prior to launching your business. You need to be getting and wearing out and about and understand all the different ways, but you can reach your target audience. Whether you need expert Google ads management, a social media manager, or someone to create a website and content, or kick-start an email campaign, whatever you need, ensure that you have nailed down your marketing approach so that it can support your startup and launch your success right from the very beginning.
Poor Pricing Strategy
Let’s be real; it doesn’t matter how amazing your product is. If you’re not pricing correctly, you’re on a fast track to disaster. If you’re pricing too high, customers might not think that they’re getting enough value for their money. Pricing too low? Customers might wonder what the catch is and if there is something wrong with selling at such a low price.
Finding the middle ground is the sweet spot for pricing; it’s something you need to pay a lot of attention to. While you can always adjust the price if it’s too high or too low, the reality is that the damage is already done from incorrect pricing.
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