Lena Gaede

Main factors why startups fail and why some succeed! Plus: important dos & don’ts for startup founders

What keeps all startup founders up at night? Knowing that nearly every second startup fails within three years. Then again, what gets them out of bed in the morning is to find out what makes them succeed! It is hard to predict, if a new business will thrive or sink, and you can’t tell by cold numbers. But there must be that certain something for some startups like Uber, Facebook or Airbnb do skyrocket. What are the success factors and the dos and don’ts for founders? Let’s find out!

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Surely we can’t talk about why startups succeed without mentioning Bill Gross and his famous TED talk. He stated five factors: idea, team, business model, funding and timing. Guess what is the most important one? Timing! It accounted for 42% of the difference between success and failure. When you think about it, it makes perfect sense! Facebook was not the first social media platform, Uber had difficulties with funding and so on.

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All new companies that are important today have one thing in common: timing. Airbnb launched during recession when people needed extra cash, same is true for Uber. Especially tech companies must be very sensitive about what the users are ready for. At the end of the day, every other of said success factors may be changed: you can adapt a business model, raise more funding, build a new team or adjust your idea. But timing is something you cannot control. If you are too early or too late, it means customers are not ready or competition is too strong, there is nothing you can do.

Now this does not mean the success of your startup is beyond your control. If you have good timing, but need to intensify all other factors, your business won’t be a sure-fire success. So, what can you do to leverage your startup? Here are some basic, but important dos and don’ts for founders:

#1 Do: act on customers’ feedback

This is the key to success: talk to your customers! As a small startup, you have the advantage that you can really do something with the customer feedback you get. When we talked about the ability to adapt, this is what we meant. So, take their opinions and wishes seriously and make adequate changes to improve your product or service!

#2 Do: learn from best practices

What do other companies do right? What makes them special? Is there something constructive for your own company? Observe and learn! Feel free to soak up some inspiration from our collection of crazy, but incredibly successful startups.

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#3 Don’t: hire the wrong team

The team equals the business. They are the people who convince investors, understand the customers, shape the product and push the business idea through hard times. With half-hearted people, you are going nowhere.

#4 Don’t: expand too soon

After some early day successes, it is easy to become super motivated and start to expand. But expansion needs to be properly funded and requires infrastructure. Ask yourself: do you have the capital and right team to handle the growth? If not, work out your basis first.

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