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Why do start-up businesses close?

Everyone knows that up to 90% of start-up companies close down within the first year. And all because their owners were overconfident and made a mistake in some small detail when organising their new business.

No one is immune to mistakes. But the experience of our analysts will allow you to look at your startup from the outside. Let’s analyse its potential together. Wouldn’t you agree that it is easier to check it at the very beginning than to lose hundreds of thousands because of an unforeseen mistake?

A targeting specialist found on the Internet and promising to set up advertising on Google or Facebook will not help you. But does he or she know your product well? If something goes wrong, he will answer that your product is not in demand, and all responsibility for the wasted budget will fall on you.

What is the reason for this kind of short-termism?
Actually, there are several. Let’s name at least five.

1. Lack of sufficient demand for the product or service. Often entrepreneurs start their business without having a complete picture in front of their eyes: what is happening today in this or that market? What will happen tomorrow, if the situation suddenly changes? A serious marketing analysis requires financial investment, and start-ups usually do not have much money. As a result, the business does not pay off and goes bankrupt.

2. Lack of financial planning. This is another scourge of start-ups who, because of the economy, often have to do everything themselves (see point 1) instead of hiring a competent accountant or consultant. There are not many professional accountants among businesspeople, which means that there is a high risk that money will run out at the most unexpected moment and the budget will simply collapse. Which happens quite often.

3. COMPETITION. If it is high, you need to make much more effort to not only attract the attention of customers, but also to keep it. Through cool advertising, high quality goods and services, as well as some unique offers. It is not easy to come up with and implement all this without your own marketing department. And you need to be a truly outstanding businessman to successfully cope with these tasks alone.

4. INCOMPREHENSIBLE PRICING. Are your prices an order of magnitude higher than your neighbours? Or, on the contrary, so low that it already resembles dumping? In both cases, you are in big trouble. If a startup does not have a clear and precise pricing policy, it simply will not be able to develop for a long time. This is one of the three ‘whales’ on which any business hangs on.

5. CONFLICTS WITHIN THE TEAM. Most often they begin when the business has already ‘spun up’ little by little, and the first serious money went into the coffers. If colleagues and business partners have not initially agreed on who will get what share, disputes and squabbles are almost inevitable. In the best case, such a business will be divided into parts, and in the worst case – liquidation and disintegration.

Of course, there is more to it than just this short list. Entire scientific works, monographs and popular books are devoted to the problems of business (and startups in particular).
But if we summarise everything that has been said on this topic, we can highlight a key problem that causes 90 per cent of businesses to fail the test of time.

And that the main is: THE BUSINESSPERSON’S LACK OF UNDERSTANDING OF THE NATURE OF THEIR BUSINESS.

What do we mean by misunderstanding?
1. Not understanding WHAT I want to do.
2. Not understanding HOW I want to do it.
3. misunderstanding WHAT I want to bring into the world with this work.
4. Not understanding HOW I WANT to interact with people as an entrepreneur.

In other words – it’s about the core values and concepts that underpin any great (and not so great) business.

It all starts with values. This should be dealt with first of all, unless, of course, you do not want to close your business a year or two after registration.

Sergiusz Woropaj

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Use messenger or contact form to get in touch with us. For billing questions please contact us by phone:
OUR LOCATIONSWhere to find us?
BusinessAds location
Poland
1 Canada Square, London E14 9XQ
United Kingdom
1 Canada Square, London E14 9XQ
FOLLOW USOur Social links
Follow Our Activities in Social Networks

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