Here at the-Coaching Blog-run by Gerard O’Donovan, our aim is to constantly bring value to those seeking to improve their lives. Therefore we have a policy of publishing articles and materials by guest authors whom we value and appreciate. Today’s guest author is Skye Sanders (United Kingdom).

There’s a scary statistic which stares every wannabe entrepreneur in the face when they are deciding whether or not to make the leap from the “safety” of a J.O.B to the uncertain, perilous world of the startup.

That statistic is the number of start-ups which fail in their first two years.  The actual statistics vary depending on industry and location but they all tell the same story.

When you consider that start-ups are considered to be “engines of growth” for the economy, providing jobs to the population that statistic becomes even more disturbing.

Not only do they provide jobs for others, they also allow the founders to express their passion and their gifts in a way that benefits the world which has to be better than working for wages in a job you don’t care about, for a company that does not care about you.

So the question is, what can we learn from start-ups that succeeded and how can we adopt those principles to guarantee our success?

We will use the “consultants approach” and diagnose the problem before defining the cure so you come away with actionable strategies that guarantee your success.

5 Causes of Start-up Failure & What You Should Do To Avoid Them

There are five critical areas to focus on if you want to guarantee the health of your Business regardless of what industry you are in.

We’re going to take a look at each of them in detail:

Cause of Failure #1 – Leading with ideas before problems

Entrepreneurs tend to be the Idea guys and gals which can be the seed of their success, but similarly, it can also be their biggest downfall.

Start-ups which fail are usually driven by the founder who is too attached to their original idea.  The way it usually plays out is that the founder has their “Newton moment” where the idea makes its way into their mind by way of some divine inspiration and from there they’re inflexible and unrelenting in the execution of the idea.

Where those admirable traits fail the start-up is when the business launches without any consideration of the problem that they are trying to Solve.  One of the biggest problems I see in new businesses is that they don’t have a clear idea of a problem they are trying to solve and how their product or service does that for their customer.

Leading with the idea is rarely the right approach.  Instead, you should seek to solve real problems faced by your target market.  To know what problems they face you need to talk to enough of them and you’ll start to see the patterns.

To make a success of your start-up you need to focus on problems before defining the solution, just like we’re doing right now.

You’ll find you generate more and better ideas when you focus on the problems as your brain gets to work both consciously and subconsciously to find a solution.

Even if you do start out with an idea, the research phase which focuses on understanding your customers’ problems will tell you if your initial idea is viable, needs pivoting or is a complete no-go.

Having this information at the outset is essential to the success of your business.

Cause of Failure #2 – Solving too small a problem

Businesses that appreciate the need to solve a problem have a head start on the idea-only crowd but the scale of the problem they solve is also very important.

To gain traction in a market and to get people excited about talking to you it’s important to solve a problem which is big enough otherwise people won’t find the time to talk to you.

The trick is to search for the pain.  Where you find pain you will find problems and the more painful, the more motivated the person will be to solve them.

Bigger problems are more expensive to solve also which means you can generate more revenue from the same number of sales.  It’s actually harder to make smaller sales than it is to make larger sales, so you may as well spend your time solving a bigger problem.

By doing this you will generate the level of revenue you need to keep the doors open with fewer customers which is essential in the early days when you are still making a name for yourself.

Focus on finding the biggest pain points your market faces (by talking to them) and then use your creativity to define a solution that can really solve their problem.

Cause of Failure #3 – Not validating the concept

Validation is the process of obtaining market feedback that tells us whether or not the idea, concept or product we have created is going to work or not.

A lot of start-ups take after the corporate giants who commission market research and focus groups.  What they don’t realize is that the insight garnered from these groups rarely has a direct impact on sales.  

Big corporations can afford to swallow that cost and even launch products which don’t sell.  You can’t afford to do that.

People in the focus groups will tell you it’s a good idea and that they would buy the product but run if ask for the money there and then.

Instead, try to validate your concept or idea by taking it to market the old fashioned way and testing the response.

Don’t build any marketing materials or websites or anything, instead just go out into your target market and pitch your offer to them.  The goal should be to generate a couple of sales within 48 hours based on the idea alone.

To find people to talk to, go back to the people you did the initial problem discovery with and pitch them.  A sale is only counted if the money is physically in your bank.

If you get 2-3 sales in 48 hours then you know you’ve validated the concept and you are good to go.

If you did not look at the feedback from the people you spoke to and either make the changes they requested and pitch them again or accept the idea isn’t viable.

Cause of Failure #4 – Time spent on Things That Don’t Matter

When you’ve just started out you need one thing and one thing only: sales.

Without sales, you don’t generate any revenue and without revenue, it’s hard to pay the bills to keep the doors open.

Despite knowing this, too many start-up founders spend their time on other, less important activities such as creating content and building websites for example.

These are “non-income generating activities” and they should never be prioritized ahead of anything which can generate revenue.

If you alone are the business and without you, the other stuff doesn’t get done then you have two options:

1. Complete income generating activities first each day and only then do other tasks.  If revenue is too low increase the level of the income generating tasks until it does.
2. Outsource repetitive work via sites like elance.com using affordable, quality virtual assistants who can take on the burden when you need some help

Spend your time wisely by focussing on the activities which sustain your business at the expense of everything else until they are complete.

Cause of Failure #5 – Fear of sales

The last and possibly biggest cause of failure is fear of selling.

Many people view sales as “sleazy” and picture the used-car salesman in his ill-fitting suit trying to twist your arm to get you to buy, though the truth is sales doesn’t have to be like that.

It’s only when you don’t know how your product or service solves a problem for your customer and you don’t know how to present it that people resort to persuasion tactics rather than genuine conversations.

The fear of sales comes from a fear of rejection.  You can dramatically reduce the level of rejection you get by solving a real, big problem in a way your market wants at a price point that is less than the perceived value they get from buying it.

When you get those things right, the sales conversation becomes easier so focus on making the offer a “no-brainer” and understand how to present your offer so that the prospect understands that.  

When you do you will find you will get polite a “no” rather than the abuse which is often the biggest fear.

Reframe the sales process in your mind; it’s not about you gaining and someone else losing it’s actually about you solving a real problem for someone and nothing else.

When you can justify to them that the money you ask is far exceeded by the value they receive in return you’ll never have trouble making sales again and the fear will dissipate.

In Summary

These lessons can be applied to any business to give you the success that you want, so remember the rules and follow them and you can be assured of a clear path to the business that you really want.

About the Author

Skye Sanders teaches coaches and success-minded entrepreneurs how to generate more income through their business by teaching them how to package and demonstrate their expertise. He teaches coaches and business owners about the psychology of marketing that you have to get right before you work on offers and copy.  From there he focuses on positioning them as an expert the eyes of your market and teaching you how to demonstrate your value.  Then he uses that to help them work backward from an income goal to give strategic plan which shows exactly what one needs to do each day to achieve your goal.