Starting your venture is no simple task, given that 90% of startups fail within the first five years. Failure is a scary thought, but it has a few lessons that entrepreneurs can learn and implement in their next startup. It can be hard to shut down the operations, but it can save you from losing additional money.
Today we will be looking at the nine warning signs you should know to save yourself from inevitable failure.
1) Generating no revenue
While the reason may seem straightforward, many firms continue to operate; hoping sales will rise sooner or later. But instead of making money, you might end up in debt. Businesses need to generate recurring revenue to keep themselves attractive for investors and customers.
Ideally, you should monitor the revenue stream in the first year of your startup before deciding. It will help you keep off liabilities and cut down any further losses.
2) Poor execution
Most businesses start with innovative ideas that have the potential to penetrate the market. However, they are unable to execute them properly. Fast and efficient execution is key to success. To monitor that, a business will need to track the progress and look out for shortcomings closely.
Unless you start to execute your plans faster than your competitors, your startup is bound to fail. Staying ahead of your competitors is critical for your startup.
3) Low customer engagement
Your startup might face a low costumer engagement in the beginning phase, which can be due to many reasons. It would be essential for you to pinpoint the causes and resolve them. Be it marketing issues or some problem with your product; you will have to fix them or have no choice but to shut down your business.
4) Lost focus
At times, the main reason startup struggles to take off is a lack of focus on the primary goal of the business. Diverging the focus elsewhere can lead to losing a sense of direction, and eventually, your startup will fall apart. That is why it is integral for you and your team to stick to the primary goal.
If you see your startup going in all directions, take adequate steps to streamline the progress, or else your startup will be closing soon.
5) High Employee Turnover Rate
Startups must monitor their employee turnover. A high turnover can mean that your startup is heading towards failure. Employees can leave for many reasons including flaws in business culture, poor management, and working environment. Employees are often aware of the business’s trajectory, and if they sense a hint of failure, they will look out for better options. It all points out a problem that needs solving as you cannot run a business on a wobbling foundation.
6) No product development
A startup can only stay competitive if it keeps improving itself. It would be best if you upgraded yourself to stay ahead of the competitors. Even if you are doing well, keep working on your product/services, as competitors can outrun your startup at any second. Keep innovating, and never rest assured.
7) Unaware of financial position
Every startup owner should know their financials at their fingertips. Many entrepreneurs are unaware of their position that leads to a barrage of problems. Learning your business numbers is critical to set and reach your goals. You should know the business’s spending, retaining, and earning and match it against your pre-set goals.
So make sure you are up-to-date with your metrics and financials as they are vital to your startup success.
8) Lack of demand for your product
Most businesses often misunderstand the actual demand for their product. It can happen due to a lack of market research before launch. If there is no demand for your product, and the sales volume has been shallow, it is crucial to either shut down or innovate the product people want.
9) Lack of leadership
As a startup owner, it is vital to form a clear leadership structure. Leaders are seen as an example by the employees, and they would also help boost their motivation and maintain order. Make sure that each one of your employees feels valued in your company.
Final thoughts
If you are sensing any warning signs, you should try to solve them before it is too late. And even if you decide to shut down, learn from the experience and start fresh as a more knowledgeable person.
