Most entrepreneurs have experienced that lightbulb moment where they’re suddenly struck with a great business idea. Of course, the best part of any new venture is where motivation is high because of new ideas, and one is confident that grit and passion alone will carry them to success, but it’s a hard fact of life that 90% of startups fail for many reasons.
“If you look into the statistics on startup success, you will likely become disheartened from ever launching your own,” says serial entrepreneur Andrew Ryan. But Ryan, who has helped 2,500 plus startups raise more than $2.2B in venture capital over the last five years, says that being prepared for the reality of what launching a startup entails will help one avoid becoming part of the statistics.
“Avoiding failure does not necessarily mean you succeed,” Ryan adds. “It might just mean that you survive.”
- Your Product Must Be Truly Great
It seems like an obvious consideration, but have you got a stellar idea? Are you ready to launch a startup on a knee-jerk reaction over a concept that fell from the sky, or have you given it long, complex consideration and asked if it holds any water? Moreover, is this an idea that would be useful to you but not to a large majority of potential buyers, clients, and investors?
“If you are not building a product that users will [absolutely] love, why are you building it?” Ryan asks. “No founder can build a sustainable, successful business on a mediocre product.”
To be in that small minority of startups that succeed, the startup needs to attract investors initially, and the product or service needs to attract customers later. So why are you pursuing it if you’re not excited to scream and shout to everyone you know about this idea?
- You will be the Public Voice of the Company
If you’re one to shy away from the spotlight, it’s essential to know that you will essentially become a public speaker when you start a business. So whether it’s giving presentations, leading a team, or speaking to the press, you need to become comfortable with people asking you questions and listening to what you have to say.
“Public speaking is an essential business skill, especially for founders,” Ryan says. “Communicating well with — and to — people has the potential to turn a one-time encounter into a more meaningful, fruitful relationship. So if you plan to launch a successful startup, you must become a master of public speaking.”
- Data is Crucial
Spending can spiral widely in the early days of a new business, so it’s important not to skip the essential housekeeping. “Before you go live, it might seem like you don’t have much data to track,” Ryan explains, “but you need to identify some data metrics that give useful insight at all phases.”
The metrics include KPIs and financial milestones; as Ryan explains, you could “end up going in circles and throwing away money.” So instead, get stuck into the dry stuff early on to save you from playing catch-up in a storm of numbers and finances later down the road.
- Money is Time
When starting, you might tell yourself that the stakes are lower, so the timeline doesn’t matter. However, the opposite is true when business people are used to hearing the phrase “time is money” when you are launching a startup.
“Money is always time,” says Ryan. “As you begin [the process of] connecting with investors, you must stick to a tight timeline to secure the funding necessary to cement the foundation of your business.” He says new startup founders should aim to raise a pre-seed round in under 90 days to give themselves a good shot at success.
- A Mentor Will Be Invaluable
Pride is a terrible burden for any startup. In the early days, no one expects you to know it all, and trying to go it alone will inevitably lead you into all the common pitfalls. But finding a mentor who has done it all before — and crucially, who has already made the mistakes — can help you progress much faster.
“Does it surprise you [to learn] that many of today’s most successful business leaders learned much from their mentors?” Ryan says. “For example, Steve Jobs mentored Mark Zuckerberg; Maya Angelou mentored Oprah Winfrey; Warren Buffett mentored Bill Gates; and Steven Spielberg mentored J.J. Abrams. Find someone farther down the road in their entrepreneurial career than you, and spend some time with them.” If you want to be in the small percentage of people who succeed, find and learn from those who have already done it.
Several factors can contribute to startup failures: funding, insufficient market research, poor business planning, or bad partnerships. But even just being aware of the common problems can be the first step to avoiding them, Ryan says.
“Once you recognize these things, you can steer clear of the dangers. Then, you’ll already be in a better position than most people who launch their startups.” Most importantly, he says: “If your goal is to beat the odds and become the one percent that succeeds, do not rely on a lucky break.”