It’s tough being the founder of a startup and there is no hiding it. The odds of success are often stacked against you. According to Neil Patel from Forbes, 90% of startups will fail. That makes for a bleak reading but wouldn’t it be great to know what the warning signs are so you know whether or not your startup may be about to fail?
We sure think it would be! That’s why we’ve written this blog post to share with you 5 key warning signs that your startup may be about to fail.
1. High Employee Turnover
It’s inevitable in startups that employees come and go, definitely more so than in an established company with more financial stability. However, a high level of employee turnover is a big warning sign that your startup may be about to fail.
If you notice that a large number of employees are leaving after a certain period of time, generally in the first year or even few months, then it’s time to evaluate what’s going on. High employee turnover could be due to a whole range of issues like the job role is too demanding, poor management, expectations not being met, and so much more.
2. Customers Are Silent Or Never Make A Repeat Purchase
Everyone knows that customers are the lifeblood of any business. There are a couple of key areas related to customers every startup founder should focus on. One is how many customers the business is acquiring each quarter and how much revenue the business is making per new customer.
Another key area is the quality of your customers and their behaviour post purchase. What this refers to is the engagement customers have with your business after they have completed their purchase. Are they engaging with you on social media? Are they sharing your content and spreading the word about your business? Are they making repeat purchases and becoming lifelong customers?
These are vital questions to think about. If you find that customers go missing and you never hear from them again, then your startup could struggle to survive long-term. What this shows is that there are underlying issues in your marketing and sales processes that are hindering growth of your startup. If these are not fixed asap then your startup may be about to fail.
3. You Don’t Know Your Finances
If you don’t know your finances then you’re heading down a guaranteed road to failure. Every business owner needs to know their numbers if they’re going to not only grow, but also to be on top of the day-to-day business operations. You need to know how much revenue you’re earning each month, how much cash flow you have, operating expenses, investment capital, customer acquisition, and much more.
If you have no idea about any of these things then you’re probably not going to build a successful startup. What is more likely is that eventually you’ll find that your startup may be about to fail due to the lack of attention on your part as founder and CEO.
4. You’re Not Improving Anything
Every company needs to be growing in order to truly stay ahead of their competitors and in touch with their market. If your startup is not improving upon anything then there is little chance you’ll survive long-term.
Customer service can always be made better. Sales processes for acquiring new customers can always be improved. Marketing efforts can be scaled and expanded on. New services and products that are in line with the market’s demand can be added to your range of offers.
These are the kinds of things that you must be improving upon as a startup.
5. Nothing Has Changed Since Inception
Something needs to change in every startup for it to be successful. We’re talking about the company’s vision, goals, who your target customers are, and more. These things can’t stay the same if your startup is to succeed long-term. Startups always need to be evolving with their markets and changing to accommodate the demand within those markets.
If your startup is not changing with your market then it’s high time to start paying attention and seeing what needs to be changed immediately before you lose too much ground. Otherwise, it’s likely you’re going to be in a situation where your startup may be about to fail so be sure you’re always innovating and growing.
Final Words: The Warning Signs That Your Startup May Be About To Fail
The five signs above are critical warning signs that your startup may be about to fail. If you have noticed that you’re making some of these mistakes then now is the time to do something about it before it’s too late.
If you’d like to speak to a legal expert about issues in your startup then book a free Startup Legal Session.