Why Startups Fail In The First Year 3 Guaranteed Tips To Avoid Loss

 According to the US Bureau of Labor Statistics, 20% of start-ups are closed in the first year of their establishment, and half of them are within the first five years, as reported by the US foundation (CBInsights), which specializes in analyzing markets, companies, and businesses. According to the same study, 35% of startups fail due to lack of market demand, in addition to several other reasons including cash flow problems, overcoming competition, a defective business model, and legal challenges.


In a report published by the American magazine (Entrepreneur) specializing in entrepreneurship, writer Alexander Zheltov says that before launching his own business, he committed himself to do great analytical work with his team. Here are the 3 Most Important Tips I learned from his experience, which you can follow to start your business and succeed in the short and long term.

1. Stop romanticizing the business idea

The writer says that the principle of "love what you do and do what you love" seems romantic and inspiring, but this does not apply to the reality of work, explaining that initially you have to assess whether there is enough demand in the market to make your passion profitable, and it is better to ask yourself a few questions before starting a business, such as:

  • What is the real reason why you want to start a business
  • What are your personal and business goals
  • Who is your client
  • What problems does your client have, and how can your company solve them
  • What do your competitors propose, and how will you differ from them
  • What resources do you need to start a business
  • Not worrying about your competitors

The author emphasizes the need to look at the market consciously and analyze the capabilities of your competitors, as this is especially important if you intend to attract investors, and one of the important questions that the investor will ask you is your competitive advantage, and in this framework, there is a 3-step system that you can use to analyze the market.

Basic research: instead of imagining what the consumer wants, you can ask him directly by using questionnaires, research, and interviews for this purpose, and if you already have customers you can use statistics from the service "Google Analytics", "YouTube", social media, reports of email services and other platforms to understand customer preferences and behavior.

Secondary research: systematizing the information received and studying it in detail; this is done by asking: Does this correspond to your understanding of the market And how can your product solve customer requests

"Quaternary analysis" (SWOT analysis): this type of analysis is considered a reliable way to study the strengths, weaknesses, opportunities, and threats of a project idea. Through this analysis, you can determine if the market needs a product and if you will achieve the success you expect.

The author shows that as a result of this research, you will find answers to these questions:

Who are your clients What are their sales, valuations, and limits?

Who are your competitors And what do your potential customers like or dislike about their products?

What should you suggest to the market to be more successful?

What kind of unique offer can you make?

Test your hypothesis

The author notes that once you conduct market research and find out what the consumer wants, you need to make sure that your product meets their demand, and it is imperative to do this at the lowest possible cost, in the form of a minimalist product, which provides an opportunity to develop a new product for minimal cost and collect feedback from potential customers.

In addition, you can use (A/B Testing) to validate your assumptions about future business; you can use this method to check which type of website version or design customers prefer best.

For example, you can create two versions of a landing page for the same purpose, with the same price and text, but with different designs or layouts, and then analyze which version consumers browsed the most and which gave you more quality.

And in the end, the writer says that after following these three steps, you can start looking for investments, noting that in this way, you can be sure that money and effort will not be wasted, and your startup will not fail.


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