It is a commonly known statistic that despite having the best intentions and some innovative products, 90 percent of all new startups do not make it to their fifth anniversary. While that is a sobering fact, there are 10 percent of startups that go on to be successful and in some cases very successful and profitable.
Companies like Uber, Facebook and Google evidence the power of a successful startup. These companies have revolutionized the way we travel, socialize and communicate and are part of every household’s lexicon. So, what set these successful startups apart from their counterparts that failed?
The answer to that question often depends on who you ask. However, there are certain tools, strategies and protocols that you can introduce in your business model that can get your business on the right path to success.
One of the most prevalent reasons startups don’t succeed is that the product or service that they are offering to the market is redundant, antiquated or unneeded. “A careful survey of failed startups determined that 42 percent of them identified the ‘lack of a market need for their product’ as the single biggest reason for their failure,” wrote Neil Patel for Entrepreneur.
Some pre-market research can save you from this fate.
Who wants to sink money into a product that no one plans to buy?
Neil Patel goes on to point out that the second biggest threat to startup success is an inability to grow quickly enough, which, in turn, blocks the startup from securing investors and capital to sustain and foster future growth.
“A startup should not be satisfied with marginal single-digit growth rates after many months of operating,” Patel goes on to explain. “If the growth doesn’t happen after a certain amount of time, then the growth will not happen.” As he says, a company that is not growing is shrinking.
While market demand and insufficient business growth appear to be separate issues, they both center on one, more meta factor: timing. Bill Gross, a financial expert and author, examined five aspects that potentially drive startup success: the initial idea, the team, the business model, the funding, and the timing. He found that timing accounted for 42 percent of the difference between success and failure and was the most significant factor in a startup’s viability.
“Fundamentally, timing is about judgment, intuition, foresight, gut instinct and an element of good fortune, to tip the scales and create the moment,” said Gross. “Timing is about ensuring that your idea doesn’t come too early and consumers aren’t ready for it.”
Experts have also found that startup founders who had previous startup experience fared better than their novice counterparts. According to a survey done by Visionluanch.com, a business website and tool, entrepreneurs who have one failed startup behind them have 20 percent success rate for future endeavors, 10 percent more than first timers.
Montreal’s Michael Genereux is the president of Gestion Termico, a transportation services company, and is well-versed in the startup sector, having founded a number of businesses in the Montreal area. “My previous experience in the startup sector is definitely invaluable knowledge that has guided my current decision making [at Gestion Termico],” Michael Genereux comments.
Genereux stresses timing and knowledge as particularly significant when launching a new startup. “You have to do your research. Is the market ready for you? Is your product needed? Ready? These are questions you have to know inside and out, not only for the initial launch, but as your business grows and changes,” Michael Genereux of Gestion Termico points out. “Potential investors will want to know that you know these things too, or they may think you aren’t ready, and change their mind about investing.”
With only one in ten startups surviving, the notion of launching a startup can be daunting. However, with research and the right timing, you can ensure your company has a fighting chance to offer the next product we cannot live without.