4 Reasons Why Most Companies Die in the First 3 Years
Starting a new business is more complicated than most people think. We rarely come across a business, so in tune with its vision and niche that it can achieve sustainable growth with minimal effort. Unfortunately, more than 90% of startup companies fail to achieve their goals. 10% of companies that do succeed will go through many near-death experiences along the way. I will highlight the factors that lead to business failure within the first three years and what you can do to ensure success.
1. Not enough marketing
Let’s assume that you offer the best services or products in the world. How would you succeed if nobody knows about them? You have to get your message across and let the world know about your business and how it can add value to its audience. You can’t find success if you’re unable to reach your prospects. Many companies fail to materialize their dreams due primarily to the absence of a sound marketing plan.
When it comes to new companies, many of them don’t have a consistent, measurable and scalable marketing system in place. It’s critical for a business to scale up marketing tactics that are successful and stop those that aren’t.
As an entrepreneur, you probably have thousands of items on your to-do list. In this situation, marketing is likely to be one of your low-priority tasks. You may try to convince yourself that you’ll focus on this area of business someday. Regardless of what you think about marketing, if you don’t have a solid marketing strategy in place from the very beginning, your company is less likely to survive. So, make sure to have a consistent marketing strategy and don’t forget to track your results.
2. Lack of vision
Without a purpose and a clear vision, a company is going nowhere. The most important thing you can do as a leader is to set practical, achievable goals and track them consistently. Businesses without well-thought-out short-term and long-term goals fail because they can’t define success or failure.
The lack of vision is another big reason why entrepreneurs fail to make an impact. The right vision is what commands commitment and attention.
3. Not delegating
As the saying goes, “Individuals don’t build great companies, teams do.” So many entrepreneurs start as a one-person show and fail to build a good team down the line. Moreover, when a business owner tries to accomplish everything without delegating, it leads to nothing but chaos and frustration.
If you want to be a successful entrepreneur, build a competent team. When you have great people in your organization, it will become easy to break free from mediocrity. It’s also a good idea to automate some of your business processes to improve operational efficiency. From HR to marketing, you will find a variety of productivity tools for almost all of your business matters.
When all of your business processes are appropriately delegated or automated, you can focus on important things such as networking, buidling business innovation, and developing result-driven marketing systems. Platforms like Upwork and Freelancer make life even easier as you don’t need to hire full-time employees to accomplish certain tasks.
4. No branding strategy
An astonishing number of startups fail due to their inability to stand out. The marketplace is a noisy world where companies fight to get customers’ attention. If you’re committed to achieving long-term business success, create your own unique identity which is relatable, memorable and persuasive. It would be best if you had a great branding strategy that can give your business the brand direction it needs to flourish. Here are some branding mistakes that led companies to their demise:
Lack of clarity of about unique selling proposition
Inconsistent corporate identity
Poor visuals
Bad logo
Failure to create brand messaging that resonates
In a competitive world, building an effective brand is survival. Successful brands kill the competition because they can communicate their value effectively.
Conclusion
There are numerous reasons why companies die within the first three years. From the significant reasons listed above to a series of other situations, establishing a business and scaling for the long-term is a difficult job. Having said that, when you understand why companies fail, you can be better prepared to avoid mistakes and navigate your way to a fruitful and never-ending journey through entrepreneurship.