Tuesday, July 28, 2020

Guest Post: What to Do When Your Startup Fails

What to Do When Your Startup Fails

Failure is part of life as an entrepreneur. As many as 90 percent of all startups fail, but knowing that you’re in good company doesn’t make the pain of a failed venture any easier to bear. There’s no point in wallowing in your disappointment, however. As an entrepreneurial go-getter, the best thing you can do is get back on your feet and keep pushing forward. Here’s how.

First, Catch Your Breath

Self-care gets put on the back burner when you’re trying to get a startup off the ground. Now that you have a moment to catch your breath, take advantage of it. Before you dive into your next venture, take that vacation you fantasized about during late nights at the office and restore the healthy diet, exercise, and sleep habits you cast aside. Spend time with loved ones, pick up your favorite hobby again, and do the things that inspire your creativity. You should also consider cleansing the home by ridding bad vibes, as doing so can reduce stress and improve your well-being. You can remove bad energy by getting rid of clutter, keeping the home clean, and purifying the doors and windows.

Then, Figure Out Your Finances

If you poured your own money into your startup, you may be hurting financially now that it’s failed. Rather than immediately thinking about the business you’ll start next, focus on finding steady work, whether that’s a full-time job or freelancing for past clients. You’ll appreciate the cash cushion when it’s time to get back to business.

Analyze What Went Wrong...

In order to avoid making the same mistakes again, you need to understand why your startup failed. Common reasons for startup failure include:

  • Lack of focus: Passion is an important trait, but too much passion causes some to attempt too much at once, driving up costs and driving down customer satisfaction.
  • Lack of experience: Many first-time entrepreneurs don’t appreciate the level of business acumen needed to run a company. Additionally, a lack of industry-specific knowledge also plagues some startups.
  • Competition or bad market fit: No matter how great your product or service is, if the market doesn’t need or want it, it won’t sell. Some latecomers discover the market is already saturated by the time they launch.
  • Out-of-control labor costs: Labor is the highest expense category in nearly every industry. While you want the best people on your team, hiring in times of high-growth can leave companies overstaffed and underworked when things slow down.

...And How to Solve It

Now that you know where you went wrong, you can learn how to do better next time.

If your lack of industry or business expertise held your company back, hire someone to fill those gaps and serve as a mentor. Services like Puri Consulting are available to help you develop better systems, as well as increase productivity and reduce production costs. Additionally, you can balance labor costs by building your team with freelancers instead of going straight to permanent staff. Freelancers’ flexibility means you can easily add or subtract from your team as your business grows. It’s also a smart way to test hires before bringing them on full-time. Many companies are accustomed to hiring freelancers for web development and design work, but freelancers can be used to do everything from admin to sales to IT.

Most other problems can be solved by spending more time in the planning, research, and testing phases of a startup. Instead of racing to market, dive deep into market research. Your goal is to find a niche that’s well defined, not saturated, and with a clear target market. And rather than scaling rapidly, invest time into product testing and feedback so that when you take the next steps, you know you’re ready.

The failure of a startup can be devastating, both emotionally and financially. Rather than letting failure keep you down, take it as a learning opportunity. With new knowledge and experience under your belt, you can enter your next venture ready to succeed.

Image via Pexels