Why many startups fail and at what stages errors occur that lead to unpleasant consequences. The success of a new business depends on a clear understanding of the target audience. 15 most significant startup mistakes, regardless of the company's field of operation.

Failures in business often happen where it seemed they simply should not happen, and the most attractive and profitable prospects turn into losses. What are the reasons for startup failures, and at what stages are mistakes made that lead to unpleasant consequences in business?

Let's try to answer these questions by listing the reasons leading to problems. Experts are unanimous that the least important factor in the success of a startup is the originality of the business idea. The idea owns only 1%, while 70% belongs to the market capacity and 29% to the team that can grow the business.

The success of a startup depends on how clearly the author of the idea understands the target audience of the business project. If there is no such idea, the venture usually ends in failure. So, let’s list the 15 most significant startup mistakes, regardless of the company’s field of operation:

1. Shortened working hours, flexible working hours, remote work

This leads to employees and even startup founders trying to earn extra money on the side, which necessarily affects the quality of their main work. Using the example of Internet business companies, it can be seen that the slightest sluggishness in decision-making and the problems associated with this lead to a rapid loss of customers. If we talk about typical mistakes of network startups, then 74% of failures were associated with premature scaling. None of the losers were able to cross the threshold of 100 thousand users with a team size 3 times larger than in successful startups. Unsustainable startups attract third-party developers 4-5 times more often than successful ones.

2. Location of the central office

Proximity to the consumer and the possibility of communication between employees are very important. The reason for failure may be absence. Poor location was cited as the cause of failure in 6% of cases.

3. Great competition

In the modern market, there are almost no uncompetitive niches. The thought of competition is no fun, but ignoring it has led to the failure of 10% of startups. Analysis of the competitive environment should be carried out as often as possible, using various tools.

4. Scattering of forces and financial resources

It is important to be able to focus on the main product, and not be scattered into many almost finished ones that are of no value. Distracting attention from the main thing leads to serious problems in the company's work.

5. Conflicts with the investor

When discussing the details of the project, even at the preparation stage, it is necessary to discuss in detail financial relationships and the distribution of profits and responsibilities. Conflicts with financial partners always call into question the success of an enterprise.

6. Underestimating personal connections

One of the reasons for failures (16% of the total) is the inability to correctly use one’s own contacts.

7. Incorrect pricing

As one of the founders of a well-known company aptly noted, their fatal strategic mistake at the initial stage was to set constantly new and low prices.

8. Reluctance to abandon a wrong decision

If your solution is clearly not delivering results, abandon it and adjust immediately! 20% of startup failures are due to stubbornness and inertia, so you need to constantly analyze the effectiveness of the entire project and its individual components.

9. Lack of motivation and special knowledge

The personal interests of each team member must coincide with the corporate ones. Lack of motivation is the cause of business failure in almost 19% of cases.

10. Late release of product or service

Releasing a product ahead of schedule without careful polishing threatens that customers will turn away from it as not interesting enough, and then the best quality finishing will no longer be able to bring them back. Releasing a product too late can result in excess release costs and loss of opportunity to take advantage of favorable circumstances. Late release of a product leads to failure in 20% of cases.

11. Illiterate distribution of resources

It is important to correctly determine whether to invest all funds in the product at once or do it gradually. The right decision in each specific case depends on the specific circumstances.

12. Lack of professionalism in product promotion

Often a businessman (especially in Internet projects) prefers “frontal” advertising to subtle marketing. Product promotion is a special area that should not be neglected.

13. Focus on fundamental, interesting problems rather than solving problems posed by the market and customers

You need to clearly understand the needs of the market in order to understand the prospects when creating a project. Use statistics, visit thematic forums

14. Passive response to consumer feedback

Neglecting the interests of customers and ignoring their feedback are fatal mistakes of many startups. Creating a product “for yourself” without feedback is fraught with business failure. We cannot delay for too long the implementation of solutions that are convenient for customers.

15. Mistakes in personnel selection

The lack of professionalism of the team is the reason for every third startup failure. It is unreasonable to hire employees on a team solely because of their relationship. Although there are very successful examples of family businesses. Personnel errors in the early stages of business are often associated with excessively inflated staff, a large number managers and a lack of performers, a complex hierarchy of subordination.

• Take care of complex and intrusive functionality for your clientele. If at first everything doesn’t work correctly, it’s okay.
• You need to host on free hosting. Make sure your site name is as complex as possible.
• The interface should be as colorful as possible. Once a client is with you, he should never forget you.
• You don’t have to post photos of the products – the client is often smart enough to do without it.
• You need to advertise on the cheapest platforms.
• It is not necessary to respond to letters of support and criticism: there are still a huge number of untapped clients around.

If you still fail and your project fails, don’t despair. Don't forget about the most valuable thing - the experience that you should take away from this. And inspiration and the desire to repeat, changing something, will definitely come - there is no doubt about it!

The activities of small enterprises are one of the promising areas. However, according to statistics, during the first year of work, failure awaits approximately 75-80% of businessmen. Subsequently, this figure increases and amounts to 95%. Only five out of a hundred enterprises continue to operate. Failures in small business haunt, in most cases, beginning entrepreneurs. The mistakes they make are very similar and, as a rule, they are what lead to failure:

Unpleasant but important things are constantly postponed and not done in a timely manner. In this case, very large debts accumulate on various issues, and in the future they have to be resolved in an emergency.

Low competitiveness. Currently, buyers are striving to find a product with a classic price-quality ratio. In such cases, even long-term business ties can be severed. The issue of competition should never be ignored.

Ineffective marketing activities lead to a drop in demand for goods and services. It is best to have a professional specialist handle the marketing of the company’s products. It is the sale of goods that is the main source of funds for normal operation and business development.

Consumer interests are often ignored. Attracting a buyer is not so difficult, it is much more difficult to retain him. One of the main issues of work is providing decent service to clients. Otherwise, the buyer will very easily find someone who will provide such a service.

Low qualifications and incompetence of workers can significantly weaken the production process. Therefore, special attention should be paid to the selection and placement of personnel. And we should never forget about material incentives: when the employee is happy with everything, then the work progresses successfully.

Poor level of knowledge of the entrepreneur in the field of his business. To become a successful businessman, you need to have a good knowledge of theoretical issues and have certain practical skills related to your small business.

The poor location of a small business will sooner or later lead to its closure. You need to carefully choose a location, taking into account such factors as the density of people and cars near the company in different times day, as well as easy access for potential clients.

Lack of real planning. Goals and objectives must be realistic with specific deadlines. The flexibility of plans allows you to change them depending on the current situation.

Material layout: Yuri Bragin

Achieving success in a small business is not easy. 80% of small companies ultimately fail.

1. Unrealistic business plan.

Starting a new company means careful planning. Examples of areas that your business plan should address are:
Intended activity.
Marketing strategy.
Number of employees and what they will do.
Your expected location.
Systems and controls. How will you ensure the smooth running of your business and meet its legal and regulatory obligations? This should include information about the information technology and security measures used.
Detailed financial forecasts, such as a report, on the movement cash, profit and loss. You should also indicate how you will achieve the projected indicators.
How will you get initial capital, such as savings or a bank loan? How will you provide funds before receiving the first orders and before receiving payment for them? Depending on the nature of the product and customers, payment may not be received until several weeks after the sale.
It's a good idea to ask for professional advice to the business plan. If you want to get a loan or any other form of financing, the business plan should be as detailed and professional as possible.

2. Difficulty getting credit or borrowing too much.

Failure to obtain credit can be a serious blow to small companies. Bank loans are difficult to obtain, and one of the main reasons for declining small business lending is that the company cannot provide sufficient security for the loan—an example of acceptable security would be property, company assets, or a personal guarantee from the owner.
Some companies have growth plans that are overly ambitious, leading them to borrow heavily to expand significantly. Then they become crippled by their debts and interest payments on large loans. Make sure you carefully consider what level of growth you can realistically expect, and never commit to loans if there are doubts about your ability to repay them.

3. Other cash flow problems.

You can reduce the likelihood of cash flow problems by controlling costs and doing your best to get customers to pay promptly. If you have too much stock, it can result in high storage and insurance costs, and there is a risk of the product going out of style before it can be sold.

4. Poor knowledge of the market.

Some companies enter into trading without understanding the market in which they operate, the size and nature of the competition, and the wants and needs of their target customers.
Be prepared to learn from early experiences. Many new businesses can look very different after years of trading before they start, simply because the owner now understands the market much better. Examples include withdrawing certain products entirely or focusing on a specific niche within a chosen market.

5. Insufficient marketing.

Very few people will know about your company the day you start trading. Make sure you dedicate sufficient resources to telling people who you are and what you have to offer. Think about what marketing methods are most suitable for communicating with your intended customer base.

6. Lack of adaptation to changing market conditions.

Many companies struggle if potential customers feel the need to cut back on their spending, as often happens during an economic downturn. Other industries may shrink as consumer habits change, for example, bookstores and CD stores have been hit hard by the rise of online shopping and other advances in technology. For example, there may be other areas that you could diversify. Such a move will require careful planning, which is necessary when starting a business.
Technological advances can quickly change a chosen business sector beyond recognition. If you're still trying to sell products that have been replaced by better versions, or you have large inventories, you're unlikely to succeed.

7. Lack of business experience.

When you start your own company, you may be responsible for several areas for the first time. If you cannot afford to hire specialized staff, then as a company leader you will need to become a real “jack of all trades.” You may need to think about how to gain the necessary skills to manage functions such as finance, marketing, and compliance.

8. Unnecessary expenses.

Some people want their company to appear like a professional business, with a stocked office, business stationery, and website. But are they really needed? Often small companies have a website, but in many cases very few customers actually contact the company as a result of browsing online - at least in the early stages. There are always free social platforms that you can use to create a web presence.

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Watch out for signs of impending collapse of your veterinary business

One of the least studied phenomena is the failure of small businesses and its causes. There is one simple explanation for this: most of the information comes from the owners of failed enterprises themselves, who are often unable to face the truth and give a sober and objective assessment of what happened. So, below is a selection from the New York Times, which describes the 9 main reasons why small businesses fail, taking into account veterinary specifics:

1. Wrong financial model. It's quite simple: a lack of demand for veterinary services offered at a price that can make a profit for the business.

2. The owner's inability to change his behavior. The owner may be stubborn, prone to risk or conflict. Also, its negative traits may include perfectionism, greed, complacency, lack of self-confidence, and susceptibility to paranoia or anger. Sometimes these types of owners may even admit that they themselves are the main problem, but do nothing about it.

3. Uncontrolled growth. It's about about a successful business that fails due to overexpansion. This includes, among other things, entering unprofitable markets, growing pains that hurt the business, and borrowing too much.

4. Poor accounting. You can't control a business if you don't know what's going on. Poor accounting or lack thereof is comparable to working blindly. There is a common misconception that a third-party accounting firm hired primarily to prepare your taxes will get all your records in order. This is actually the responsibility of the owner or manager of the clinic.

5. Lack of financial airbag. Business is cyclical, and tough periods can and will occur from time to time. Such troubles can shake the financial stability of a veterinary clinic. If you don't have money and the ability to borrow it, you may not be able to recover from financial difficulties.

6. Mediocre quality. Chances are you will never meet an owner who calls the products or services offered at his clinic mediocre. However, customer loyalty and good reputation have the same important for most businesses, so are marketing strategies.

7. Production inefficiency. Expending too much on rent, labor, and materials can be a barrier to success. Now more than ever, cost-conscious companies have the advantage. If you don't have the courage to negotiate terms that reflect today's economic realities, you will have a hard time building a successful business.

8. Inadequate management. This includes a lack of focus, strategic thinking, planning, standards of care and everything else that is integral to effective clinic management. Add in warring partners and disgruntled relatives, and you could be preparing for disaster.

9. Lack of succession plan. Nepotism, power struggles, and replacement of important employees with people who are not qualified are the reasons why many family businesses do not survive to the next generation.

If you feel like your business is on the verge of collapse, it's time to think about why things went wrong. Most likely, the above factors were at least partially responsible for your failure.

Translated: Vladimir Khubiryants and the Vetmanager team

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The temptation to start your own business can compensate for the harsh reality around you. From the very beginning, the probability of an unsuccessful attempt at own entrepreneurship should not be rejected, since it is quite high. It is useful to know the experience of failures, so let’s first consider the reasons for failures in business, as well as how you can avoid them. This is especially important when drawing up a business plan for your own enterprise, which determines the business strategy.

40% of business failures occur within the first three years, let's name the main reasons for this.

LACK OF EXPERIENCE. The owner of an enterprise must know all the rules for creating and managing a business. This is not only the provision of goods or customer service, but also financial management, sales, advertising, promoting goods to consumers and much more. There are many reasons to give advice to a new businessman, and he should not be afraid to ask about everything.

LACK OF MONEY. It takes quite a long time for a new business to establish itself. Typical mistakes There are, for example, the following: overestimation of market size and underestimation of required prices. You have to be extremely careful with your finances. If necessary, you need to know where and how you can get the necessary financial support.

UNPLANNED BUSINESS DEVELOPMENT. A business can become its own caricature very quickly for a variety of reasons. If, for example, an entrepreneur provides any service, then due to incorrect advertising, poor choice of location, poor-quality service and a strong competitor, the waiting time for customers/clients may be too long and the expected customer/client may use the services of a competitor. If, for example, the business consists of assembling a product, then there may not be enough components or materials to sell it in time. It may also happen that the product is delivered on time, but the period for receiving money for it is too long for the businessman’s budget. In these cases, it should be possible to obtain the necessary loan

BAD MANAGEMENT. Late management and too little attention to routine but necessary matters can be the reason for the failure of a new business. Self-discipline and efficient use time and personnel avoid this.

Management procedures in business should be as simple as possible. Otherwise, too much time may be spent on these procedures to the detriment of labor productivity. Such procedures include the time and duration of meetings, distribution of responsibilities among employees, work and rest hours, labor discipline, etc. It is recommended to determine in advance the basic, priority management procedures and adhere to them in the process of business management. Such procedures are sometimes called “red tapes” of business management.

PROBLEMS OF LENDING. If a businessman has taken out a loan from a bank, then during its use it is useful to inform the bank in advance about his own financial situation and, of course, try to repay the debt on time. This shows that the entrepreneur is managing his business and usually provides an opportunity to extend or obtain additional credit.

POOR LOCATION. The right choice location is vital for many types of business, such as retail, restaurant, bar, cafe, travel agency, hotel, pharmacy and many others.

HIGH ACCOUNTS RECEIVABLE. Accounts receivable must be paid, and the faster the company achieves this, the more confident your business will feel. In this case, kindness and compliance can only bring harm. A plan for collecting accounts receivable is one of the main tools for running a business.

HIGH OVERLOADING. Overstocking was one of the main ills that hit businesses during the last economic downturn. There is no doubt that it is important to always have stocks of goods and take advantage of discounts for bulk purchases, but it is equally important to avoid an oversupply of goods in warehouses. It's a waste of money. Controlling the quantity of goods allows you to save money and increase profits.

LARGE CAPITAL INVESTMENT IN FIXED ASSETS. When deciding to purchase fixed assets, a manager must first take into account two main factors: firstly, whether these assets are really needed by the enterprise and, secondly, whether they should be purchased or leased. This decision must be made taking into account all the resources of the enterprise, so as not to damage working capital and the financing of other expenses.

UNQUALIFIED EMPLOYEES. You may have been in a situation where employees were rude and made it clear that they were bothered by your presence in their workplace. Such employees are too expensive for the company. In addition, dishonest employees can lead to the collapse of the enterprise.

OTHER REASONS. Other reasons that can lead to the collapse of an enterprise include serious illness of the owner, disagreements between partners, fraud, family problems, underwriting errors and changing economic conditions. So we have the reasons why an enterprise may cease to exist. The likelihood that a new venture will be successful is slightly higher than the chance of getting twenty-one points in hand on the first deal. After carefully reviewing the reasons listed above, you may come to the conclusion that owning and running a business does not quite fit your ideas about these activities. This does not mean that you are a failure; your cancellation of your plans will simply be a smart way to save time, energy and money.

If you decide to start your own business or are already running a newly formed enterprise, re-read the section “Causes of failure of a small business” as often as possible. With its help, you will be able to identify a critical situation in the early stages of its development and take action. necessary steps to eliminate it.