Source | Entrepreneur : By Udit Goenka
The term “start-up” has been trending since the birth of web-based businesses and has become the go-to buzzword on every entrepreneur’s lips. Most entrepreneurs aspire to have their own start-up which will one day become the next billion-dollar company.
However, research from the Small Business Administration, released in 2014 states that only half of all the new businesses survive during the first five years while the remaining half survive their first ten years.
If we run the numbers, roughly thirty-five percent of businesses survive during the first ten years from their operational date. According to Forbes, eight out of ten start-ups fail within eighteen months of their launch date. A failure rate of eighty percent is alarming in the start-up ecosystem. Such numbers can discourage a lot of young entrepreneurs with aspirations to build the next billion-dollar start-up.
Investors, meanwhile, are left with the burden of the decision to weigh their financial risks against the potential of a start-up’s groundbreaking idea. With over ten years of experience as an entrepreneur, I have seen many start-ups grow and fail including one of my own start-ups.
Based on my own experience running a game hosting startup based out of Los Angeles and its subsequent failure, I’ve identified seven major reasons why web start-ups fail and how you can avoid these mistakes.
1. No Growth or Option to Scale
Starting a business is actually easy, despite common misconceptions about time and expense. According to the Kauffman Foundation’s estimate published on the Small Business Administration’s website, all home-based businesses can be launched for as little as $1,000 to $3,000.
While most entrepreneurs start small, they tend to miss one big point: The potential reach of their business, and how much their company can grow.