According to a Harvard Business School study by Shikhar Ghosh, 75 percent of venture-backed startups fail. Another study says that the failure rate of all US companies after five years was over 50 percent, and over 70 percent after 10 years.
These numbers only show that it is a tough and highly competitive world out there, no matter what industry you are in. If you want to increase your company’s chances of success, you need to look at the patterns, strategies, and qualities that make or break a startup.
Looking at horror stories from failed startups and success stories from companies that made it will show you plenty of interesting commonalities. Here we will discuss how to set yourself up your success.
There is a consistent set of factors that make up successful startup companies—and this is supported by research. The Startup Genome report by the Ecommerce Genome looked at 650 internet startups and identified several indicators of success.
They found that startups with passionate, driven, and committed founders were more likely to succeed. In this case, commitment refers to the willingness to stay on course and stick with a chosen path.
Other key factors to success include:
- Patience and persistence
- Willingness to observe, listen, and learn
- Leadership with general and specific business knowledge
- Balance of technical and business knowledge
All of these qualities refer to the habits and attitudes of a successful leader. With a strong-willed and passionate leader, startups have a better chance of thriving.
Leadership without Vision: The People Perish
The entire crew will suffer if the captain doesn’t know where to steer the ship. In fact, some of the most common reasons for startup failure are related to a leader’s lack of vision.
Lack of focus, lack of motivation, lack of commitment, unwillingness to listen, unwillingness to learn, and too much pride are seen as attitudes that can drive a company to the ground. Some leaders have great qualities, but they don’t have enough business knowledge, particularly when it comes to finance, operations, and marketing.
Other factors that cause startups to fail (that don’t necessarily refer to the founders) are the following: no market need, strong competition, lack of funds, pricing issues, poor product, poor marketing, and ignoring customers. Some startups fail because they raise too much money too soon. It is better to raise money conservatively and then grow as the business grows.
Even though these attributes are more business-related, they can still be tied to leadership and the leader’s ability to build a strong team.
Building a startup is ultimately a team effort. If the leader has vision, but they don’t have the right team to execute their goals, their company will still fail. This is why leaders need to identify each member’s hard and soft skills.
Hard skills are teachable abilities or skill sets that are easily measurable. These are the technical abilities that fit the job and produce results. Hard skills can be acquired in the classroom or in an online course, through training, or on the job. Examples of hard skills are marketing skills, IT skills, writing skills, creative skills, etc.
On the other hand, soft skills are abilities that are not unique to any job. They may even be intangible qualities that a person has that make them more productive or effective. Examples of soft skills are management skills and communication skills.
If a leader can utilize their team’s soft and hard skills, they can be more productive all around. You need to take the time to understand your team’s strengths and limitations because they are the ones who will help you push your company towards your goals.
Knowing where you want to go and how to get there makes a good leader. Understanding how to leverage your team’s strengths to get the best results will get you on the right track. But developing a healthy workplace culture is what will solidify your team into one coherent working force.
“Culture eats strategy for breakfast,” said the late business management guru Peter Drucker.
Workplace culture is about operationalizing an organization’s values. It’s about putting your values to work. Culture guides employee decisions including their technical needs and plans, and how they interact with one another.
Kennected, for example, has a culture of innovation and fun. It inspires the team to come up with creative solutions to problems. It even encourages members to come up with new ways to create value for customers.
It is true that culture happens whether you want it to or not, but it is important to develop a culture that reflects the company’s values. It is the DNA of the company, and it is largely influenced by its founders—not by their words, but their actions.
Proper workplace culture, vision, and teamwork: these are the factors that drive a startup towards success. Without these things, companies can fail and become a part of the terrible statistic that plagues most startup companies. But if you develop a solid business plan, build the right team, and develop an effective culture you can significantly improve your chances of succeeding in this highly competitive market.