Start-Ups: Why Most Fail and Few Succeed

If you are thinking of starting a new business, be aware of the high failure percentage for start-ups. In a study done by Statistic Brain, the going-out-of-business rate for all U.S. companies after five years was approximately 50 percent, and after ten years the rate shot up to more than 70 percent. This study also breaks down the failure rate by industry. Another study by Harvard Business School found that 75 percent of venture-backed startups fail. Obviously, you will have more chances of success if you pay attention to the reasons why start-ups fail.

Why is the Failure Rate for Start-Ups so High?

The emphasis is on the following traits of company leaders whose businesses failed:

• Insufficient passion, commitment, and focus.

• Unwillingness to see, listen and learn.

• Lack of proper mentorship and following bad advice.

• Little business knowledge.

• Raising too much money too soon.

Another study produced more reasons for failure:

• Inadequate or nonexistent business model.

• No market need for the service or product.

• Poor product or service; needs of customers ignored.

• Poor marketing; got outcompeted by a rival.

• Pricing/cost issues.

• Ran out of cash.

• The wrong team.

Why do Some Start-Ups Succeed?

One study looked at 650 internet startups and came up with these key factors that are common to successful entrepreneurs:

• Passion.

• Commitment to stick with a chosen path but willing to adjust if necessary.

• Willing to observe, listen and learn.

• Development of effective mentoring relationships.

• Possession of general and specific business knowledge.

• Understanding of “Lean Startup” principles – i.e., raising just enough funding in one round to reach the next predetermined milestone.

Plan, Commit and Win

If you have the all-important passion and all the other qualities to make your start-up a success, there is no need to settle for failure because of lack of funding. Revap Group Capital can provide you with the capital you need to ensure your start-up stays in business. Set up a consultation with us today.

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