3 Reasons Tech Startups Fail & What Founders Must Do To Survive
Practically every tech founder has a strong opinion, but…
Many of the leaders globally express a strategically driven, data-driven response here.
Covid was responsible for the 21st century’s greatest surge in entrepreneurship producing the #1 greatest year in startup births.
– This led to the U.S. IRS receiving almost 4.4 million new business applications.
– Sadly and strange, 20% of startups failed in year one.
Unbelievably, 75% did not make it.
The data behind this phenomenon came from Wilbur Labs which surveyed 150 startup founders about the pressures that
threatened their businesses.
It was supplemented from 350 startup failures from CB Insights, and Autopsy analyzed them for patterns.
Why Startups fail
#1 – they ran out of money.
– Of the remaining 19 reasons, # 6 was they were outcompeted.
– NOT ONE startup cited “Sales” and the key reason.
— Why?
Isn’t sales part of any other reasonable issue?
Tech startups know they will produce sales, profits, &that will take time. But how much?
– With this data, and my own experience building 2 tech startups; “sales growth, margin & cash-flow aligned to a formidable business plan” is THE #1 way to overt failure.
Causes of startup failures
Over decades, startup failures, money, then financing, remained the top reasons for failure.
– And under-performing sales are on the shoulders of a tech startup founder.
– The answer is it is their responsibility to make “Revenue DNA a priority with each employee” within the business.
– Having RevenueDNA would have alerted them to the causes of these underlying failures.
– Issues such as lack of differentiation, under-estimating market fit, poor selling skills, lack of marketing power, failure to sell large deals, more cash from 3-year deals, ….
and are ALL these components are inside RevenueDNA.
Guidance from others founder
The best advice comes from the people who walk not a mile in your shoes, but 100.
They bring advice and often brutally honest advice (which is sorely needed in 2022).
– The most common stories resound with “learn from your mistakes”, “listen to customers”, and “be sure there’s enough the market for your SaaS or solution.”
But again, the lack of “pure sales” talk is an expensive mistake.
The 3 Things to Offset Failure
1) Drive Startup Profitability & Survival
Research, plan, and make RevenueDNA at the core of every team, employee, strategic initiatives, and expense.
2) Make forecasting pipelines synonymous with forecasting earnings.
3) Be willing to pivot the business in face of insurmountable uncertainty.
Let’s share and help others find a way to grow…what do YOU use?
Excerpts here are from: https://lnkd.in/eR2tZQSc – from Wilbur Labs
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