How to Prevent Your Start-up from Failing within the First Year?

In accordance with a recent report provided by the US Bureau of Labor Statistics, around 20% of all small businesses fail in the first year. The main reasons behind this high failure rate include but are not limited to the dried-up cash flow, targeting the wrong market, and a lack of market research. If you are about to start your own business and you are scared of losing your newly established venture – that’s ok. While 80% of all start-ups are guaranteed to fail, there are certain steps you could take to minimise the possibility of your start-up being jolted in the nascent stage. Whether you are planning to establish a business or your start-up has not yet reached the first year of its lifecycle, there is always something to learn about how to achieve success and give your venture its best chance.

1. Get close to your customer

Customers play a central role in any business because they purchase and use your products and services. That is why being as close to your customers as possible is one of the most effective tactics that can help you maintain your start-up business viable during the first year of its existence. Make sure to communicate with your customers using whatever communication channels and means they find suitable, so you could promptly solve their struggles and problems. For example, you could use different sales channels and establish a strong online presence to improve your knowledge of your customer’s profile.


2. Create a unique value proposition

To make sure your start-up survives its first year, you need to create the utility of your product or service, as well as communicate the value proposition to the customer loud and clear. If you perfectly know the profile of your customer, then you will not have any problem identifying their needs, preferences, and expectations. Based on this knowledge, you can develop a product that fully addresses those needs. However, you must properly communicate your value proposition, so the customer could fully understand the utility of your product.


3. Research the market

Before designing a product, you need to know the market you are going to serve. Researching the market is one of the most fundamental tasks you should accomplish beforehand if you want to launch a successful business. By conducting surveys and analysing whatever market data you can get access to, you will be able to know how the completion develops; the trends that emerge, grow, and halt; and the opportunities that exist in the selected market segment you could grasp.


4. Set ambitious yet realistic objectives

Many start-up businesses fall victim to enormously ambitious and rather bad business plans that set unrealistic goals or are overcrowded with unnecessary details. Such business plans do not provide clear guidance on what you and your team should do to take your start-up business to the next level. A bad business plan sets poor benchmarks and wrong goals, as well as creates confusion, posing a threat to a start-up venture in the initial phase. What you need to do is create a concise and clear business plan, so you could present it to potential investors and build a viable business upon it.


5. Don’t wait too long before releasing your product

One common mistake that many start-up owners do is waiting too long before launching their product or service in an attempt to perfect the concept and its embodiment. However, more often than not, spending too much time on a prototype is a bad idea because it not only drains your financial resources but also prevents you from getting feedback on your product. For example, following a minimum viable product approach is an effective strategy that allows for developing your product through a series of iterations, each of which delivers new features that early adopters use.


6. Don’t ignore the user feedback

Once your product has launched, you need to devote all your attention to the user’s feedback because it is the holy grail of business success. When online services like PhD Centre publish client testimonials on their home page, this arouses trust from potential customers. Some start-up founders fail to consider user feedback after the launch because they are afraid of being criticised. Remember that accepting negative feedback is important because it gives an idea of how you could further improve your offering. Get to the root of your customers’ complaints to make sure your product meets their demands and requirements.


7. Hire wisely

Since many start-up businesses rely on a very limited number of employees, hiring the right people plays a crucial role in their success. However, due to financial and other constraints, start-up founders often select cheap labour, which is the first step to burying an emerging business. You need to wisely plan your recruitment strategy and design a robust employee selection process to make sure you hire highly skilled and experienced employees.


8. Develop your leadership qualities and skills

As a start-up founder, you need to lead your business, which requires highly developed leadership and communication skills and competencies. Remember that personal development is key to success, so keep building your acumen in order to effectively motivate your employees, delegate tasks, and communicate your vision and ideas to your team.


9. Invest wisely

Budgeting is another crucial area that determines whether a start-up will survive the first year of its existence. Many entrepreneurs are willing to invest a lot of financial resources in the initial stage of production, which may not be the best way forward or could even crush the start-up down. Instead of scaling your start-up business as soon as you get enough money to do so, it would be wiser to build your company using your own savings and earnings (e.g., bootstrapping).


10. Have the right consultants

If you want your start-up business to survive the competition and prosper, you need to surround yourself with professionals whose specialised skills will help you achieve this goal. At the same time, these individuals must be honest and straightforward with you to make sure your decisions and actions are not driven by your biases.


Catherine Smith is an online Marketing Manager at PhD Centre, specialising in PhD thesis writing. She is passionate about researching and writing on various topics, including Education, Marketing, and Technology.   

About the author

Catherine Smith is an online Marketing Manager at PhD Centre, specialising in PhD thesis writing. She is passionate about researching and writing on various topics, including Education, Marketing, and Technology.


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