Why Do The New Start-ups Fail?

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Out of many new businesses that start every year, approximately 50% fail, as revealed by the market statistics. Delving deeper into the reason for such failures converge to a few factors, which are common to most of these small businesses. One always has the option to treat these failures as the stepping stone to the future success. However, the common causes to these business tumbles, if known, can help the new entrepreneurs to be cautious with their ventures.

Here are a few very common reasons about why the new businesses fail.

Delay In Revenue Generation:

The businesses, especially the new ones, thrive on the customer relations to get stronger. These customers are the revenue generators who help the business to continue. With the new ventures, the revenue generation apparently gets delayed. One strong reason is that the entrepreneurs get too busy proving themselves during initial stages. They start their venture with a strong motive, but get easier with the revenue in return. A promising future seldom weakens their present finances. In such circumstances, the business cannot last longer. Even with no profit estimated, the operational costs need to be met. This becomes one of the primary reasons for the new start ups shutting down too fast.

Investors Looking For Trademarks:

The investors today are more cautious than they ever were. The patent, registration and trademarks mean a lot to them. They feel secured investing in a company which has a few products patented, and has an attractive firm trademark to display. This is where most of the new small businesses fail. For these ventures, owning the intellectual property is a matter of time and money. They neither feel the need nor do they have the funds for such investments. This holds them back with the potential customers.

If not very early, all the businesses should consider registering their intellectual properties rather sooner than later. This makes them reliable.

A Missing Business Plan:

Most of the business owners treat the business plan as yet another document. The fact is that the business plan reveals a lot about the vision and prospect of a venture, not only to the investors, but to the business owner as well. It is a method to convey the goal of the business in clarity, and share that with the rest of the world. The investors cannot believe in a new start up that has nothing to show to them. They need a strong and confident initiative which can go a long way. A good business plan is exactly what can convince them.

Insufficient Marketing:

Your product may be excellent, but getting the buyers buy is a difficult task. There should be something appealing otherwise it will not be able to stand out of the crowd. In other words, the product needs to be marketed and advertised as precisely as can be. It must be so popular before its launch that the consumers immediately feel like owning that, and the investors find themselves beamed to invest in your firm. Word of mouth can play a role. The other options can be getting tied up with the local media. The local newspapers and the channels are the good sources to reach a huge audience.

The Team Lacks Inexperience:

The crucial part of gathering funds is satisfied only with the investors relying on the business plan. A part of this plan is to make them aware that there is a strong team working behind the idea. Is your team having an ample experience to say so? Tackle this part by investing on a strong team which can work in collaboration, and win the investors’ confidence.

This article is contributed by Simmon who is managing online marketing part of GlobalServe.Com.cy that helps International Business companies.

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