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Four Reasons Why Startups fail and How to Avoid them

Author: Juan Bendana
by Juan Bendana
Posted: Aug 03, 2020

Compelling statistics indicate that more than 71% of the business, including Houston startups , collapse within the ten years from commencement. The statistics are more alarming, especially for young entrepreneurs like you, who wish to try their chance in the world of massive failures. But are you going to be coward enough to kill your idea for fear of failure? No, because you are a winner. And winners don't fear failure, but they plan and anticipate success.

To effectively plan for your startups so that it can make beyond ten years, just like the 29% that succeed, you need to learn from the mistakes of others. For this reason, we give you the top four reasons that are highly responsible for the business collapses in the USA. Also, for every reason, you learn the best way to leverage through, to alleviate any chance of repeating similar mistakes in your startups.

Financial issues

Most startup Houston fails because of financial issues. To be precise, Scores' statistics indicate that 84% of the business that collapse have issues with cash flows. The issues with cash flow originate from either low income, mismanagement of available finances, and misappropriation of funds. These factors are attributed to the lack of financial plans for your business or overlooking of financial matters.

How to overcome financial issues in your business

Never say, ‘enough is enough’ until it is finally done? By this, we imply that you don't soften on the strictness with finance that you had at the start of the startup because of minor breakthrough. A majority of the entrepreneur's let their business to collapse as they tend away from day zero for this reason. What happens is that at the start, all efforts are directed towards working with limited amounts. But as time goes by, they shift their focus to profits and forget about the basics of financial management.

Moreover, the Choice to Plough back profits would serve better in making financial reserves for your startup Houston’s. Also, check your credit performance and stay safe from blacklisting. That's for the fact that you might need emergency funds to settle your business problem.

Poor customer-business relationship

Another common mistake for collapsing businesses is the poor customer-business relationship. It can either be in terms of inadequate communication or undistinguished products and services. Such often happens due to inadequate marketing or overly low product or service distinction due to poor internalization of feedback in innovation and invention.

How to avoid the mistake

Heavily invest in marketing the product more than anything else during the initial stages of commencement. Customer feedback should be used in product/ service restructure as par Houston Startup program.

Insufficient business planning

Also, some of the collapsing business has their problems with the business plans. Houston Startup program dictates that for any business that starts, there must be a plan in place. Within the plan, there is a financial plan which is most fundamental. Therefore, if you wish to invest and grow at all, stick to the business plan in daily operations within the business.

Poor management structure

Human resource is essential in determining the success of any startup business. That's because they are responsible for daily operations within the business hence determining the quality and quantity of goods or services. Also, they are accountable for the smooth operations and transitions in startups.

Such a problem can be avoided by defining the roles and duties of each person within your business. Often, that's done within the business plan, which serves as a blueprint for the daily operations. Also, as per the Houston Innovation Hub, focus on hiring only the best, even if it means at higher costs, especially at initial stages of starting.

About the Author

Juan Bendana is a full time freelance writer who deals in writing with various niches like technology, Pest Control, food, health, business development, and more.

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Author: Juan Bendana

Juan Bendana

Member since: Nov 21, 2018
Published articles: 6

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