Langmeier Backup
Data sheets:
Data sheets:
Contact Langmeier Software
Reseller Partner
About the company
Choose your region
- Europe
- Middle East and Africa
- Australia and Oceania
|
Langmeier Software Magazine
Why start-ups fail Often, a business idea is not as good as you thought - but many entrepreneurs are unteachable because they are unable to take criticism.There are many reasons why young companies have to give up after just a few years. Even though every failed start-up has its own story, recurring causes can be identified. We have compiled five reasons why companies can fail: 1. inadequate capital resourcesMany young start-ups are so intoxicated by their business idea that they underestimate the initial lean period until break-even and do not have enough of their own funds to bridge this period. Even if only low or no salaries are paid in the early days, there are ongoing costs that need to be covered. A good business plan is worth its weight in gold when it comes to recognizing risks in good time, correctly estimating capital requirements and procuring sufficient equity capital. 2. overestimating the market potentialAnother important reason why young companies fail is an unrealistic assessment of the market potential. For example, Matti Niebelschütz, the founder of the perfume mail order company myParfum, had the right instinct for the market opportunities of his business idea, but completely misjudged the sales potential. With an eye on the important Christmas business, he invested heavily in machinery in 2012 to expand production and increased the number of employees accordingly. After the expected sales did not materialize, myParfum had to file for insolvency in spring 2013. However, the founder continued to believe in his idea and bought the company back from the insolvency administrator in August 2013. Since then, he has continued to run the business on a smaller scale. This is a good example of how failure does not always have to mean the final end.
3. lack of demand / market saturationMany young founders feel the same way. They think they have a brilliant idea and are able to convince investors. However, demand then either does not materialize at all or it does not develop as quickly as they had hoped. This is often the case when it comes to a product innovation that is still completely new on the market. In this case, a lot of lead time is needed to make the business idea known. On the other hand, start-ups can fail because the market is now saturated or the competition is too great. The best example of this is the boom in tanning salons in the 1980/90s or fitness studios today. If you want to launch a business idea like this, you absolutely need a unique selling point that makes you stand out from the crowd.
4. overestimating oneselfMany founders overestimate their business idea. In 95 percent of cases, arrogance seems to be behind this behavior, which is based on the assumption that the business idea is unique. After a short time, however, many founders realize that they are not alone with their idea and that there is more competition than they thought. The euphoria is followed by disillusionment, which is accompanied by the realization that more work is in store for the start-up and additional costs are to be expected. Some founders are struck by the fear of failure for the first time.
5. defense against criticismHowever, arrogance is not the cause, but rather an effect that causes projects, start-ups and companies to fail. At least that's how the online magazine "The Enterpreneur Mind" sees it. It also has nothing to do with arrogance in the conventional sense. Rather, messenger substances that are released when the motivation system is activated are responsible for this. The founders become intoxicated with their ideas, display an exaggerated self-confidence and become immune to any form of criticism. This hubris often comes across as arrogance to third parties. The problem is that any criticism from outside is reflexively and usually emotionally fended off. This is particularly bad when an idea is nowhere near as good as you think it is.
Related articles
Post a comment here...
This article covers the topics:Reasons why companies failOverestimation of market potential An expandable complete business solution Start-ups Business ideas |
|