Startup is a unique business because not many people can build a successful business from scratch. It is also unique because it has two main characteristics – growth and innovation. Growth because a startup has the potential to grow exponent rather than linearly and is scalable, while innovation because a startup is testing assumptions that haven’t been tested before, sufficiently new technologies, products and services or markets.
Since it is unique and most likely innovative, not many startups can achieve victory. Statistics showed that 10 percent of startups fail within the first year, while 70 percent fail during their years two through five of development. According to the survey, the number one reason why startups fail is due to misreading market demand. This contributes to nearly half (42 percent) startup failure cases.
See also: What Do Startup Founders Need to Stay FOCUS?
No entrepreneur wants to build a startup that will stumble down. Many will do anything to make their business among the top shelves. If this is exactly what you desire, make sure to know the signs when your business is on the brink of collapsing, including revenue drop, shortage of cash flow, opaque accounts, poor management, slow response, no new engagement with customers, haphazard accounting, and high staff turnover.
When you identify the cause, you can start making actions to save the business from sinking. Check out our tips below.
Don’t hire everyone who is qualified
Startups need to make sure every penny is used wisely, so leaders need to be smart about choosing the talent they hired, either in-house or through innovative solutions. When your startup is struggling, you should hire loyal talent who can get the job done well, have due diligence and work ethic, instead of hiring super smart and super high expectation employees.
Hiring a few inexperienced people who are willing to trust you and your vision for the startup will help you go through all the hardship. These teams can also gain valuable experience and become key pillars in your startup later on. Their own personal growth will feel connected to the growth of the company and they will fight with you every day. And when you are hiring your next employees, you have to think about the promises you are making to your early hires.
At first, people joining your team tend to be excited and hopeful that one day the startup will grow and they become part of it. However, when your startup faces a hardship that might put the business in danger, you should carefully manage your team’s expectations. You must tell the truth or your employees won’t be able to weather the storms of financial instability that the business is experiencing.
Hard times become difficult for everyone because they don’t expect it, but if everything is communicated well, even the wildest storms can be tamed. Tough times will also reveal who stays true to your business mission and vision.
Revisit your plan
Building a business needs one’s entire focus, that’s why many founders typically only have one plan to run with. Many make other unexpected plans when the business does not go well. “If you want real results, you have to dare yourself to try a different approach.” That said, one plan is fine but make sure this plan works. If it is not, you need to revisit your plan and make necessary adjustments when necessary.
Read also: 9 Main Characteristics of Successful Startup Businesses