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Why 90% of Start-Ups Fail (And What You Can Do To Succeed)

For every Uber, there are hundreds of failed transport companies.

For every Apple, there are thousands of failed technology companies.

For every Amazon, there are hundreds of thousands of failed e-commerce websites.

You may be thinking of launching your own start-up but before even starting, here’s something that you don’t exactly want to hear – a reality check. Start-up failure in Hong Kong is actually more common than you think.

Launching a business is actually a lot harder than you think. In fact, 90% of start-ups fail.

If you’re thinking of starting your own business, below are some start-up mistakes that hold aspiring business owners back the most.  Let’s get straight to them.

Why do Start-Ups Fail?

Mistake #1: Not solving a market problem

Without a viable business model, your start-up is doomed from the beginning. You cannot gain any customers if you don’t solve the biggest problems and challenges individuals experience.

How to Succeed

You need to know how to make your solution valuable for others, where they are willing to pay you to solve their problem in any way. When coming up with your business model, ask yourself these guiding questions:

  1. Who is your target audience?
    Instead of casting your net too widely, narrow your audience down to two or three detailed buyer personas. This is the most important aspect of your business model. 
  1. What is your value proposition?
    You need to establish exactly what your business will offer to potential clients and how your product/service is better than your competitors. 
  1. How will you obtain key business resources?
    Business resources include capital, customer lists, raw materials, manufacturing, labour, and intellectual property. 
  1. How will you sell your product/service?
    Key things to take note of are the payment methods, marketing, and distribution process. 

In the beginning, it is crucial to get your target audience’s honest opinions and feedback— whether positive or negative. Even if you have a great idea and put tons of features into your product/service, if you don’t put customers as your priority, your start-up isn’t likely to take off.

Mistake #2: Not willing to pivot

Ever had that idea that you just can’t let go? There’s a fine line between being determined and obstinate.

Relentlessly pursuing a bad idea will simply sap your precious resources and money. It also does not bode well for your business as this can lead to a lack of progress.

How to Succeed

Take a step back and look at the bigger picture:

  • Your business strategy
  • Market context
  • Company culture
  • Core mission

Also, don’t blindly follow the footsteps of established start-ups and refuse to pivot. You need to find your own business paths and growth instead of solely copying other companies’ journey and experience.

Mistake #3: Not hiring the right talents

Talents are at the heart of your start-up. After all, they are the ones driving your business to succeed. Don’t be overly-confident and think that only your experience is enough to keep the business afloat.

Many people often say this: 

“I can succeed by myself because I have enough experience in starting a business.”

Are you sure though? Compared to first time founders who have an 18% chance of success, founders who have failed previously have a 20% chance of success while founders of a previously successful business have a 30% chance of success with their next venture, according to a research paper.

While the odds increased slightly, 20-30% is still a pretty paltry percentage. Solo founders take a whopping 3.6x longer to outgrow their startup phase.

How to Succeed

Find some talents across different disciplines to join you. The ideal combo is a designer, marketeer, and engineer.

Never under-estimate the value of a balanced team. These people can bring in refreshing perspectives and expertise that you may lack. Studies also show that a marketeer and designer has 2.9x more user growth than an unbalanced team

Mistake #4: Lack of recurring cash and capital

According to statistics, the second largest reason why start-ups fail (29% of cases) is due to running out of funding.

Without a recurring injection of cash and capital, the process will tragically be something like this:

  1. Founder raises some capital
  2. Founder builds the start-up with the capital
  3. Founder sells product/service at a loss
  4. Founder runs out of money to maintain the start-up
  5. Start-up dies

How to Succeed

The initial funding of your business will likely come from your, your family’s, and/or close friends’ own pockets.

The next thing to focus on is how to raise outside capital and cash. In the early stages, start-ups can engage in seed funding or funding by angel investors.

If your business really takes off, these fundings can be followed by Series A, B and C funding rounds.

Mistake #5: Don’t launch and expand too quickly

Launching and scaling up too fast will also cause everything to move too quickly, too soon. You and your staff may not be ready to handle an influx of queries and orders, resulting in messy processes and unprofessional services.

How to Succeed

Before launching, ensure your customer’s journey is watertight – from the payment process up to the receiving of the product/service.Before thinking of expanding, you need to ensure that your business model is repeated. This means that your business is acquiring customers in a consistent way.

Key Takeaways

The main points to note before and after launching your start-up are:

  1. Solve a market problem.
  2. Be willing to pivot.
  3. Hire the right talents.
  4. Have recurring cash and capital.
  5. Launch and expand at the correct time.

Sounds like common sense? Many people still often make these very common mistakes. Avoiding them will likely boost your chances of successfully launching your start-up.

Yes, 90% of start-ups fail in Hong Kong. But who’s to say that you cannot be part of the 10% that make it? Or the remaining 1% that evolve to become a unicorn start-up.


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