Reasons why your First stage startup Fails
It's far more likely that your first stage startup fails. Being prepared for that outcome will take some of the stings out of the experience. Some of the biggest names in the business community are Bill Gates and Walt Disney failed in their first stage startup fails.
- You (probably) aren’t an exception.
The exact statistics have a number of variations, but most sources agree that the vast majority first stage startup fails. Some argue that as little as 4% of companies have survived for more than 10 years, with more than half dying in the first few years of operation. It's reassuring to think you're the exception to the rule, or that you're more likely than your contemporaries to succeed. But the statistics suggest that this really isn't the case.
- You’re inexperienced
There is a reason why more experienced professionals produce more than amateurs — experience yields knowledge and skills. If this is your first stage startup fails, when making decisions, setting a direction, or facing harsh challenges, you will not have previous experiences to draw on.
It is true that other experiences in your life can replace some level of experience here, such as holding a leadership role, navigating the industry in a lower-level position, or even working with other entrepreneurs. But you won't know what it's really like to run a startup until you're in the driver's seat.
- You won’t take risks.
First stage startup tends to be more conservative than their counterparts with more experience. This is partly because of the lack of trust of the first-stage startups, which stems from a lack of experience. The fact that first-timers have access to fewer resources than their more experienced counterparts is also partly due to it.
And that means that they are less able to tolerate financial instability and have a greater ability to manage the success of the company. The conservative path can lead to success potentially.
- You don’t have enough contacts.
Even if you're outgoing, for your first stage startup, it's likely that you won't have a very large network, and your professional network will play a major role in your business's ultimate success. Your contacts will provide you with potential customers, partnerships, suppliers, and even staff, and maybe even investors or mentors who can give you advice if you're lucky.
You will miss out on these advantages without a strong network in place and lag behind rivals who have stronger connections.
- Your instincts are untested
Your instincts can actually be a valuable instrument for strategizing and decision-making when properly developed. "Good" instincts are generally the product of experience; grandmaster chess players can "feel" the correct moves because they have played thousands of games and can almost unconsciously read the board.
Seasoned entrepreneurs, in the same way, can sense which options are better than others and are more likely to lead their respective companies in the right direction.
- You’re too excited
You're nervous and excited when your idea is first stage startup — but that enthusiasm may end up being a hindrance. If you're too excited, you may be pulled in too many different
Directions at once, simultaneously pursuing different startup ideas rather than focusing on the single items most needed by your startup, in a big push to get to market faster, you can also invest in expansion and growth too early, or over-spend your resources.
- People won’t take you as seriously.
The sad truth is that if this is your first stage startup, most people — including investors, partners, employees and customers — will not take you as seriously. They will know that less experienced entrepreneurs who are not as successful, and they can avoid your company simply because it has a slightly lower chance of succeeding behind the wheel with you. At its finest, it is a self-fulfilling prophecy.
All these factors may seem intimidating, but here you have to remember an important silver lining. The failure of your company is not the end — it's the beginning. Every failure in your life will teach you something, from small, inconspicuous errors to massive heartbreaking events, and give you experience and a platform for your next chance to do something better.
Many entrepreneurs end up starting and running multiple companies, so if your first one fails; it only means that your second one is more likely to succeed. In failure, successful entrepreneurs thrive, so don't think of failure as a dirty word; instead, think of it as getting a big step closer to your path to realizing your dreams of entrepreneurship.