6 Key Lessons Learned from Failed Startups
It's a sad but undeniable fact of entrepreneurial life. Failed startups happen all the time. Some are caused by market forces or unexpected shifts in customer demand, circumstances largely beyond the control of any individual business owner. But--and it's a very important "but"--failure often occurs because a fledgling business owner overlooks the kinds of mistakes others have made previously and fails to take advantage of the "lessons learned."
A far more effective approach is understanding reasons behind the failed startups and then doing everything in your power to avoid repeating history.
Here are six key lessons to learn from failed startups:
1. Know who your customers are and the problems they face.
What good is the greatest new product idea in the world if it doesn't satisfy the needs of customers? Failure is an almost inevitable result if an entrepreneur neglects to validate his or her product with a targeted customer base. You must have an in-depth understanding of the types of problems your prospective customers face--and in what ways your fantastic new product or service can solve those problems.
2. Find investors who are right for your business.
Money to back your new venture doesn't miraculously appear when you need it most, as some failed entrepreneurs learned the hard way. Nor does partnering with any investor you meet ultimately serve your best interests. An investor who doesn't "get" what your new business is all about might raise an objection later on that stalls development or sabotages your best-laid launch plans. As part of the fundraising process, work hard to identify investors with whom you have a good fit and whose strategies and goals align with your own.
3. Don't believe your own hype.
Some entrepreneurs hate the marketing and self-promotion part of startups, while others have a gift for getting themselves and their new product ideas noticed. But some ventures fail because the founder was too intent on creating buzz for the upcoming launch and got caught up in the hype machine. Getting written up in a leading industry publication or finding yourself interviewed on a business TV network is great publicity, but if you start believing the hype, you'll get distracted from what's most important--doing all the "grunt work" required to get a new product ready to go and then successfully launching it into the marketplace.
4. Stay focused!
Speaking of focus, this is a quality notably missing in too many failed startups. The founder's own creativity and wealth of great ideas can keep him or her from focusing on the absolute essentials. What's the revenue-generating component? How will the new product get made? What's the best way to deliver it to consumers? Beware of becoming an "idea machine," warns Dominic Tarn, author of The New Goldrush: A Quick Guide to Startups. "Too many ideas can flow into your head and you don't have enough time in the day to project all of them forward with the eloquent execution that you'd like."
5. Balance work and life.
We all understand the value of balancing work with life, but knowing this in your gut is something altogether different. The road to startup success is littered with entrepreneurs who simply burned out because they expended too much time and energy on work alone, and neglected such things as eating right, getting enough sleep and exercise, and cultivating healthy relationships. Be aware of your mental and physical well-being and incorporate life-affirming habits into your daily routine.
6. Learn from your mistakes.
Every experience that goes into your efforts to build a startup are worth remembering. Some say it's the mistakes you make along the way that offer the greatest value. First, though, you have to acknowledge when things go wrong and be accountable for what happened, rather than assign blame elsewhere. Mistakes happen, even in highly successful ventures. If you swallow your pride and learn how to do things differently in the future, your chances of success become infinitely better.