The headlines seem constantly filled with stories of billion-dollar IPOs and start-up successes. But the reality is that only a third of start-ups make it to the 10-year mark with twenty per cent failing during the first year alone. Here are three of the most common causes of failure.

No market, no customers

It may sound obvious, but it is surprising the number of start-ups that launch without researching whether there is a market need for their product or service. And if there is no need there will be no customers. It does not matter whether a company has the most innovative technology, the best team, and support of big name investors – if they are not solving a market problem then they will eventually fail.

This is exactly the situation the founders of TreehouseLogic found themselves in, according a recent CB Insights report. The founders explained: “We had great technology, great data on shopping behaviour, great reputation as a though leader, great expertise, great advisors, etc, but what we didn’t have was [a]technology or business model that solved a pain point in a scalable way.”

Ignoring customer feedback

Customers are central to the success of any business and whilst it may not be true that the “customer is always right”, businesses are always helped by listening to what their customers are saying. Early adopters make for great beta testers, and often help companies refine their product by giving regular and detailed feedback.

There are always numerous stories of founders getting “tunnel vision” and failing to listen to what their customers wanted. Instead of driving towards creating a product customers want to use, many founders focus their efforts on making the tool they want to build. Sometimes this singular focus will create an entirely new market, like Steve Jobs managed on a variety of occasions, but for most founders a failure to listen to their customers will end in failure. The VoterTide founders put it best in the report, explaining “It’s easy to get tricked into thinking your thing is cool. You have to pay attention to your customers and adapt to their needs.”

Poor marketing

Founders too often become consumed with creating the “perfect” product and fail to remember that the only way to get new customers is to get your product in front of new people. It may once have been true that “if you build it, they will come”, but in today’s hyper competitive marketplace you need to build the product and invite people to try it if you want to start generating sales.

There are a variety of techniques start-ups have used over the years to try and build hype, from waiting lists, freemium offers, and referral incentives, but all of these approaches are only useful in building buzz after you have your first few customers. It will not matter if your company has developed what technologically would be the best UK online casino if nobody knows it exists, and they will spend their money elsewhere at one of your company’s many competitors.


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