What Should Startups Do to Avoid Failure?

What should startups do to avoid failure?

It is a general estimation that the failure rate of startups is between 80% - 90%. Venture capitalist and managing director of Greycroft Partners, Alan Patricof predicted that the failure rate for startups will increase in 2015. Despite advanced consumer data and increased digital, paid marketing techniques, many startup companies still continue to fail. However with passion, hard work and relentless planning, you can avoid failure and sustain your startup.

Major reasons for failure of a startup and how to avoid them

Business Plan

Market validation, business planning and research are very important for startups. You need to be clear on what the market demand is and what consumer needs are. Always have a clear, organized and validated revenue plan, market strategy plan and the target market. It must be based on correct, accurate information.

Business plan should include

• Company description
• Description of business
• Vision
• Target market
• Analysis of competition
• Marketing Plan and
• Goal.

Always concentrate on including the pain points and solutions. Having a business plan will help you to recognize the potential problems your company can face and categorize the problems.

Management

Lack of management expertise and business experience is the main causes of downfall of startups. Young entrepreneurs, who lack experience and knowledge in hiring and managing employees, usually face problems while running a startup. When you're trying to start your own company, one of the biggest obstacles can be effective time management.

Even if you've got the necessary business skills, a talented team and plenty of funding to get started, you'll still need to make sure you're using your time as efficiently as possible.

Marketing Plan

Startup needs to keep their marketing plan simple. A startup’s marketing plan should include a MAT (Milestones, Assumptions, and Tasks). The MAT provides enough structure to organize the necessary activities among the team and keep everyone focused on the same objectives. It also provides a framework for engaging the team in discussing the key assumptions about the business, and reaching a consensus on the company’s overall view. The purpose of developing MAT is to:

• Understand the scope of your undertaking.
• Tests assumptions quickly.
• Find and replace critical flaws in your thinking.

Budgeting

Financial: capital equipment and supply list, balance sheet, income statement and cash flow analysis, sales and expense forecast