It’s no secret that the tech industry is a cut-throat place. After all, around 90% of all tech startups will fail, with 10% of those failures occurring within a year of launching. If you believe that you have a winning idea for a tech company, it’s important to remember that the product alone is not enough.
What matters most is being able to avoid the fatal mistakes that kill off even the most promising of startups. Read on to find out the five reasons tech companies fail, to learn what you should be working to avoid.
1. No Cash
There’s no beating around the bush with this one. Most startups fail simply because they run out of cash before they can turn a profit. That’s why you must be able to guarantee long-term funding from investors that will help get you into the realm of sustainable profitability. It’s why massive companies like Airbnb and Deliveroo have plenty of cash flow despite never turning a profit.
2. Inability to Entice Customers
No matter how good your product is, you need to be able to aggressively entice customers to capture market share. It’s why many companies like Uber and Doordash offer market-beating discounts to undercut competitors. Another good example here is the online casino industry, which is constantly being driven by new, tech-savvy platforms. A successful site like Mr Green online casino offers generous bonuses and discounts to new customers, essentially giving them free money to play slots and poker with on their platform. By doing this, Mr Green is investing to attract and retain loyal customers. From the customer’s perspective, this gives them a reason to play at the platform, especially as the site covers other aspects like live casino or betting.
3. Lack of Focus
This might sound nebulous, but it really should be emphasized. Too many tech startup founders do not think about the initial product development phase. They think that, once they have their seed funding and their product, the rest will come naturally. Oftentimes, founders do not think about sales growth, marketing, investment, and R&D until it is already too late and the money has dried up.
4. Incorrect Personnel
The right people will be the difference between failure and success. It is not enough to assume that you can handle it. Any serious founder needs to invest significant chunks of time and effort into recruiting and retaining the right personnel for the job. Here, you can take inspiration from some of the world’s most successful tech companies. The likes of Facebook and Tesla have incredibly thorough hiring processes that involve a highly holistic approach, looking beyond paper qualifications to ensure that each new hire is a fit for the company culture.
5. Ineffective Marketing
Finally, don’t forget the importance of getting your message out there. It is difficult to predict just how many potential Fortune 500 companies have gone under simply because nobody actually heard about their product. If you cannot get your message out there, you will not succeed. That’s why your marketing and sales strategies should always be at the forefront of your planning, rather than being tacked on at the end as an afterthought.
By avoiding these fatal tech startup mistakes, you can build a thriving and truly future-proof company.
