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We are in an age where startups spring up faster than mushrooms.

You could throw a stone and hit the next up-and-rising entrepreneur. They will indulge you in their ideas and ideals, introducing new concepts and potential products to you. But, only half of them will see it through, and of the half, even lesser will truly make an indelible mark on the market.

We see success stories all the time – we see Larry Page’s story on how he envisioned indexing web pages into digestible links and we see Mark Zuckerberg’s story on how he wanted a network for his fellow Harvard mates to connect seamlessly. We get inspired and start drawing out a blueprint of what we can do. It doesn’t necessarily have to be tech – it could be an apparel empire like local women’s wear giant Love, Bonito, it could be an accommodation dictionary like emerging international powerhouse Airbnb; it could be anything.

But along with dreams of success, we must also tackle the possibility of failure. Failure doesn’t have to equate to a useless attempt; in fact, it is an invaluable lesson for everyone involved. When asked about the thousands of attempts at the first light bulb that failed, Thomas Edison famously commented that, “I have not failed. I’ve just found 10,000 ways that won’t work.”

Which comes to the crux of our topic at hand: if I could tell you why startups fail, can you actively avoid these mistakes and have a smoother journey than the case studies we are about to evaluate?

Let’s give it a whirl:

Reason #8: Underutilizing your connections

We meet people everyday. Perhaps because most of our day-to-day connections involve people who are in the working class, we assume they don’t share our vision of being the next big startup one day. But that is ridiculously untrue.

All your networks are important and it is vital you use them all. Be it to spread your idea or blast your product, get people involved and stop trying to do everything yourselves. You may find more help than you think! Always remember that your network is your net worth.

Reason #7: Unwillingness to discontinue an underperforming product

A famous case study of this exact reason is Yahoo!. Despite knowing that its search engine was getting increasing idle, it stubbornly hung on, refusing to try a new product or launch a new initiative.

The best of us get attached to the first product we created. It is a natural attachment, but it can also be the costliest attachment you’ll ever invest in. Cut underperforming products at the root or give them a facelift – never try to hang on if you know it's a bleak situation.

Reason #6: Lack of funds / investors

Have you ever used a great product and wondered why more people didn’t use it? It could a product, an app or a service. The answer? Lack of funds.

Take this example: Carousell, a local uprising marketplace app, was launched in 2012. I’ve been avidly using it since 2012 and for a while, I wondered why more people didn’t realize this service was superior to Gumtree. Carousell was poised to take the marketplace industry by storm but no one important sensed it yet.

Eventually, after struggling under the radar for 3 years, they secured their first mega investor, Sequoia Capital, for US$6 million. Today, it is growing exponentially with app improvement updates almost every month, as compared to once every six months in between 2012 – 2014.

Many amazing products and services slip by us simply because their investors (or lack of) have insufficient funding for the project. Be it marketing or mass production, most brilliant products run into stalemate the exact time money runs out.

Make sure your investors believe in your product or service as strongly as you do, and have pockets deep enough to bring it to the forefront of the market. In the startup scene, cash is truly king!

Reason #5: Lack of passion / not an expert in the area

Would you commission a banker to create a startup related to magazine publishing? Or would you rope in an accountant for a startup involving apparel?

It isn’t to say each of these professionals can’t have crossover interests – but it is impeccably important for startups to recognize outstanding individuals in the field and get them onboard.

You’re starting the next Starbucks? Look for production line or mid-management F&B employees. You’re starting a publishing house? Look for passionate freelance writers. Match the right people to your startup.

Reason #4: Bad launch timing / poor keep-up timing

Sometimes, it boils down to bad timing. You could have the best product in the world but if the economy happens to be poor or you happen to coincide with a seasoned competitor’s newest project, you’d be bested out in a heartbeat.

As such, it is important to do adequate research on your field. Are you starting an alcohol delivery service? Make sure it is the down period of advertising for all your competitors. Are you starting a customized gaming chair empire? Make sure no other furniture giant are pushing similar products for a song.

Local gaming chair brand SecretLab took on established competitor DXRacer by pushing out newer and grander thrones, just six months within their already impressive inception. They were relentless in social media promoting too, sponsoring local YouTube giant Tan JianHao and drawing avid-gaming customers from his wide and varied fan base.

DXRacer stood little chance against the hungry SecretLab, and has now been edged out by the latter to be most local gamers’ first choice when it comes to customized gaming chairs.

Reason #3: Not welcoming customer feedback

In an ideal scenario where you finally get your product out, the next thing to do is to get feedback on it. Even the best of us will consider disallowing negative reviews to appear on our webpage / Facebook page. Some institutions even go to the extent of taking out the element of comments altogether.

This makes your customers feel one-sided. When they don’t have a communicative hand with your brand, it is unlikely they would picture themselves supporting it, let alone offer valuable pointers that could aid your business model.

Reason #2: Not knowing how to use social media’s influence

Traditional marketing is dead, long live traditional marketing.

Social media is the new rage and it is showing no signs of stopping. In an age where information can snap across screens in milliseconds, it is important to brandish your social media platform as a shiny beacon to customers. Learn to look at all social media comments, good or bad, as constructive, as we will learn in the following case study:

Early this year, a woman found a huntsman spider trapped in a sealed salad package at Woolsworths. She posted a video of the spider struggling inside the packaging and tagged the supermarket giant. Her video went viral in seconds, with users divided on their thoughts.

Half of them said it is horrifying how low Woolsworths sets the bar on their quality checking. Half of them said this is a great show of how fresh Woolsworths’ salads are; so clean of chemical exposure that it can house a spider. Interestingly, it was the latter that garnered the most worldwide support. People started taking photos with their Wooslworths’ salads, with some joking they’re looking to adopt a spider and were disappointed that theirs came out clean. It was a great victory for Woolsworths, and it cost nothing at all.

From that we can derive this: people are strange. All comments hold a 50/50 chance it can go either way. This debate could easily go viral. Welcome all feedback because you never know where it will lead.

But make sure you have a Class A marketing team at hand to turn the situation around should your case be in your disfavor.

Reason #1: Not targeting a market need

Let’s say you are offering solutions, perhaps SEO services. You target publishing houses making the transit to digital and mid-level lifestyle websites, hoping they’d take up your comprehensive service. After all, they need it most, why wouldn’t they want to appear on the first-page of Google?

Wrong. As a publishing insider would say – we don’t have priorities for a more efficient website. We want more readers with our current website. And so we would rather keep our PR friends mighty entertained than to cast a further thought your way.

Find the glaring holes in the market and conceptualize an idea to patch it. Change your services from SEO specializing to targeted demographic networking – instead of offering to optimize our website, find people using our same keywords and offer to link these like-minded folks with us. These folks will become our advertisers / customers, and you would’ve nailed us safely in your client base.

Now that you know why startups fail, let nothing hold you back – start working on your next million-dollar enterprise! If you’re still having trouble and would like some assistance, worry not.

Here at Royal Academy, we can guide you along with our team of business consultants and assist you in linking up your business idea to our academy’s network which includes potential investors to get funding for your startup. If you are keen to find out more about our business consultancy packages and the tailored training programs we conduct, contact us via our website or send us an email (support@royalacademy.com) and we will be more than glad to furnish you with the information you require. Let us help you bring your startup to greater heights, avoiding the pitfalls listed in this article.

Nicole Lee
Royal Academy Pte Ltd
www.royalacademy.com