The rate at which startups are built in Africa is amazing, especially startups that are innovative or startups that meet a dire need. In recent times, Africa has been blessed with great startups, most of which are successful and have created lots of opportunities not only for its population but also added to the economic growth of the continent.
Some successful startups which are making waves and waxing stronger daily include Jumia, Dropfi, Saya, Ushahidi amongst a host of others.
Just as startups spring up daily, the rate at which they disappear from the face of the earth is quite alarming. According to Statistics brain, 25% of startups fail after the first year, 36% fail after the second year, 44% fail after the third year while 78% of startups disappear after year 10.
One may begin to wonder the reasons startups fail so that other startups can avoid them in order to exist longer than the tenth year. Every startup that fails has a different reason why it went under but there are major reasons why startups keep failing and they include:
. Product
.Planning
.Marketing
.Followup capital
.Money
Product
The idea or a physical product of a startup is one factor that keeps entrepreneurs highly optimistic and enthusiastic, so much that they fail to do the needful concerning their proposed product. Granted that this product has passed all theoretical tests but what about realistic tests?
Often times, startups develop products for themselves instead of the market.
Most startups fail to do a thorough market survey about a potential product. They fail to check if the product is friendly if the market is ready for this product, they also fail to take into cognizance the voice of their potential customers and go ahead to launch products that are not ready.
Planning
The planning of a business can be seen as the organizing or designing of a business framework in other to achieve great success and this includes the setting of goals, schedules, task, and objectives.
A startup without detailed planning is qualified as a failed candidate. For a startup to succeed, the appropriate structure needs to be put in place.
In Africa, some entrepreneurs start up a business with the idea of employing staffs and checking the books at a given time.
Knowing when to cut your losses and reroute your efforts is highly important and it can only be done when adequate planning has been made.
Marketing
Most startups bask in the euphoria of the awesomeness of their product that they fail to do adequate marketing of their product/services expecting the market to grant them a soft landing.
Marketing in the life of startups cannot be overemphasized and the earlier startups come to terms with it the better for them. No matter how old a startup is, marketing is needed to remind your customers of the importance of using your products/services.
Follow-on funding
Follow-on funds are funds that are used at the later stage of a business or company. Startups make provision for seed funds but fail to make provision for follow-on funds.
Many startups need continual financing for periods longer than they predicted as the rate of launching out is done at a loss and funds are needed to cover the operating cost of the startup to prevent going under.
Money
One of the cogent reasons for the failure of startups is money. Most entrepreneurs are so comfortable with their new status that they relax and go overboard with expenses forgetting that a startup is one that needs a constant influx of money.
They tend to employ staffs that are not needed, rent a bigger space and live a life worthy of a CEO.
Gary Vaynerchuk explained in his book of how he spent money that was important in solving his needs and never thought of acquiring the latest car model even when his business was raking in millions of Dollars, he never saw himself as a millionaire and this is the kind of attitude that most African entrepreneurs should emulate.
As much as we try to be optimistic in our daily dealings especially when starting out in business, the success of a startup rests on the shoulders of knowledge of what will and what will not seek the ship of a startup.
Related: 7 Reasons Africa Is A Fertile Ground For Startups
Okeke Chisom
Chisom Okeke, popularly known as “Somly” is a graduate of Accounting from the University of Benin, Benin City. She is a phenomenal writer and an “Agripreneur” whose focus is to change the narrative of the agricultural sector by providing timely agricultural information and opportunities available in the agricultural sector. She is also a virtual assistant and the anchor of Somly Writes. You can connect with her via Social Media, Facebook – Okeke Chisom; Instagram – okeke_somly; Twitter – somly