Facts are everywhere. Every subject and genre have a comprised litany of facts and statistics that range across the scale of encouragement. Startups are no exception and unfortunately, not all the available statistics are encouraging for entrepreneurs.
In fact, some of the figures are downright terrifying to a potential startup founder, who is thinking about starting a new venture.
Especially, when the naysayers catch the ear of the potential entrepreneur. Common questions, which are more accusations, formed as a question, are as follows: Do you know how many new businesses fail? Do you know how much time that is going to take up? What are you going to do to make money while you’re starting up?
So, to quickly educate potential startup founders, let’s look at the following 6 crazy facts about startups.
2. Fail-Rate for Startups
Forbs confirmed that ninety percent of startups will ultimately fail. This number makes your stomach drop if you’re seriously considering introducing a startup idea to the world, doesn’t it? To add insult to injury, only ten percent of startups survive the first 5 years.
These statistics make startups look like the underdog, with a seemingly insurmountable obstacle ahead of them. However, there are those ten percent, the crème of the crop, that can pilot their startup through the trials and tribulations into the oasis of startup success.
2. Overestimated Intellectual Value
Everyone likes to think they are smart and it is true that intelligence comes in many forms. Therefore, it affords each human being with an intellectual value. However, when that value is vastly overrated, it equates to failure for startup companies. About seventy percent of startup founders overestimate the value of their intellectual property (IP). While intellectual property is pivotal to any startup’s success, the IP that is branded must be useful. Too many (well over half) founders discovered too late that their IP was not the surefire competitive advantage that they thought they had when they started their new business.
The lesson in this fact is to know your worth. While a founder should utilize everything at their disposal, there are very few serious customers that are going to be fooled by a cliché gift-wrapped as a unicorn.
3. Meeting Market Demand
Unbelievably, 4 out of 10 new startups don´t match their startup’s market demand. When creating a business, the first step is to research market demand; after all, if the startup is unnecessary for the area that it is advertising to, there is no point in pursuing it. According to Fortune, though, forty percent of startups either skip this step in the business plan altogether, or they are hopeful that their salesmen skills will outlast their useless product for so long, that the product becomes relevant.
(Pro Tip: A founder could have a silver tongue that weaves wonder with their words and this business plan still won’t work.)
4. Time Constraints
There are only twenty-four hours in the day. Eighty percent of startups need more time to perfect their craft, find customers, and increase their visibility to their market. However, they can’t do so because of time constraints. This inevitably leads to failure. However, how is it that some startups can do it all and be successful in this endeavor?
Entrepreneur suggests that the solution to this time constraint is the 80/20 rule. This rule implies that eighty percent of a startup’s sales come from twenty percent of the work that a business does. So, it isn’t the quantity of the work, it is the quality. Instead of fixing your own toilet, or adjusting your website yourself, allocate those tasks to someone else and work on the tasks that only the founder can do.
Delegating your tasks is much more cost effective and a lot easier than trying to bend the time and space continuum, just so that the founder can fix a leaky faucet.
5. Flooded Market
While new small businesses are as old as businesses themselves, the idea of a startup specifically is rather novel. With the advancement of technology and the ability for people to work, hire, and conduct business in its entirety with people in different continents, startups have evolved. Currently, there is an astonishing number of new startups and the movement is progressing rapidly. A consensus among studies from City AM indicates that about two-hundred-thousand startups are conceived globally, every day.
While this can be extremely good news for those people who have the right idea and accurate research, for many, this is simply a flooded market, with everyone trying to capitalize on an idea that is overdone or completely useless.
Therefore, instead of grasping for the first idea that pops into your head and working it out along the way, create a detailed plan, specifying the need that your startup is going to fill. Be harsh on yourself, because no one else is going to be easy. While you don’t want to talk yourself out of your dream, just make sure that you aren’t setting yourself up for disappointment. If you are your worst critic, you will be able to prepare for anything the world can throw at you.
6. Part-Time Pays Off
Seventy percent of startups were built on a part-time basis and grew into a full-time adventure. Depending on the type of startup, it is possible to hold a traditional job while working toward a startup success. In many instances, this helps diminish cash flow problems, while still being able to eat and pay rent. Of course, when a founder believes in their idea, its hard to continue working for their old job, but if the startup takes longer than expected, or fails completely, if you keep your day job, the startup situation can be regarded as a hobby that didn’t work out, instead of a personal financial crisis.
Hopefully, these 6 crazy facts about startups have helped to educate the potential startup founder populous and even though these are more answers to common questions, they are still information. After all, even with these statistics, thousands of startups are conceived every day. How did these entrepreneurs justify their actions? They took this information and utilized it; turning it around to benefit them. True, some, unfortunately, continue to contribute to these statistics, but many were able to rise above the sea of uncertainty and watch their dream morph into reality.
So, when will you start your new company and change the world forever?