Published on June 13th, 2013 | by Jose Vasquez0
3 Failure Statistics Startup Tech Companies Should Acknowledge
Understanding the failure statistics of startup tech companies can help you identify and prevent possible obstacles to your business
As a business owner, you might be afraid to acknowledge the statistics on startup company failure in the United States. But if you understand the statistics and look at them in the right light, you can understand the factors that lead to such crushing and intimidating failure rates. The more you understand, the more you’ll be able to prevent and the better chance you’ll have at achieving success in the industry.
25 Percent of Companies Fail in the First Year
One quarter of all startup companies fail during the first year of business. It’s a fact. That number is even higher for startup tech companies, due to the volatile nature of the industry. But knowing this fact should make you more strategic—many entrepreneurs become arrogant and feel as though their business is foolproof. Having a more realistic perspective should help keep you focused and motivated.
46 Percent of Companies Fail Due to Incompetence
Examples of incompetence include:
- Volatile or ineffective pricing schedules
- Excessive or reckless spending
- Failing to have a long-term plan
- No financing or record keeping
There’s no “cure all” preventative measure for incompetence, unfortunately, and most entrepreneurs don’t realize what they’re doing is wrong until it’s too late. The best thing you can do is rely on experienced advisors—people who have seen and helped dozens of companies grow over the years—to help you understand any mistakes you’re making and give you honest advice about your business model. Listen to them.
The Biggest Management Mistake Cited by Failed Companies is “Going into Business for the Wrong Reasons”
Are you just trying to get rich? There’s nothing wrong with a little ambition, but focusing only on massive personal gain is going to compromise your business model sooner or later. There are many good reasons to get into business, but if you’re focused on something overly materialistic, you’re going to end up getting distracted and make poor decisions.
Statistics are important to consider when starting your business. Use them as insightful learning opportunities, to avoid the common mistakes of others and start your tech company with integrity.
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