HOW TO GET $ 180 MILLION INVESTMENT AND BURN
50% of small businesses close during the year. The survival rate of IT startups is even lower – 9 out of 10 companies expect failure.
Learn how to learn from mistakes and not turn failure into total defeat, in our blog post by Neil Patel, BPlans, and Harvard Business Review.
Why do companies fail?
#1. Bloated ego
To see a mistake and learn from it, one has to admit one’s own imperfection.
To pacify the ego does not mean to lose self-confidence. Self-confidence and success are the essential qualities of a successful entrepreneur. But people with a bloated ego do not just have high self-esteem, they consider themselves much better than everyone else.
Fun fact: 78% of the 400,000 PayScale survey participants think they work best in the company.
Leaders fall into this trap especially often. The more money and success, the more ego. The larger the ego, the stronger the belief in one’s own infallibility. Such people ignore mistakes and step on the same rake.
A prime example of presumptuous failure is the story of the fall of Kodak.
The reasons for large fakap and what they teach. 0
Kodak couldn’t stand Fuji when it entered the US market with cheaper cameras, films and accessories. Kodak management underestimated the competitor – they were confident that buyers in the United States would remain faithful to their “native” brand, despite the high prices.
By the way, Kodak had every chance to become a leader in the post-film era. In 1977, they patented the first digital camera.
However, the company made so good sales of film cameras and films that it did not consider it necessary to develop this technology before it was too late.
In 2012, Kodak went bankrupt.
# 2 Lack of market research
The main reason for startup failure is the lack of market demand for the product.
The reasons for large fakap and what they teach.
Your ideas about the market and the needs of the target audience can seriously differ from reality. Therefore, marketing research is an essential step in creating a product.
An example of a product launch without market research is the Pets.com online pet store. He appeared in 1998 and lasted only two years.
The creators were sure that pet owners would want to order goods online, they know how to do it, and they have such an opportunity. Recall: it was in 1998.
They also believed that people would be more willing to buy on a specialized website than at an online supermarket, would not mind paying for delivery and wait a few days instead of going out and buying pet food in a store around the corner.
The project received $ 100 million of investments, and the lion’s share of this money went to large-scale advertising campaigns in the press, online, on TV, radio and during major events.
Everyone was talking about Pets.com, and in the wake of popularity, the company received another $ 80 million. But recognition was not converted into sales. By this time, Pets.com managed to invest in large storage facilities and hire 320 employees.
Costs significantly exceeded revenues, and in 2000 the company was liquidated.
# 3 Ignoring expert opinion
Another consequence of excessive self-confidence is ignoring the opinions of other specialists.
In the mid-50s, US residents began to massively sell old Fords and buy cars from new manufacturers. Ford spent millions of dollars on research to create a mid-priced subsidiary brand.
However, for the three years of Edsel’s existence, the company managed to sell only 118 thousand cars. Failure cost Ford $ 250 million, which is now equivalent to about $ 2 billion.
All business content in a convenient format. Interviews, cases, life hacks of the world – in our telegram channel. Join now!
One of the reasons for the failure is unsuccessful naming. Employees of the advertising agency offered 18 thousand names, 10 of which were presented to board members.
However, the committee rejected all options, and in the end the model was called Edsel – named after Henry Ford’s son. When the PR manager of the company found out about this decision, he left a short note to the project manager: “We have just lost 200 thousand sales.”
#4. No error analysis
Instead of trying to forget your own mistakes as quickly as possible, you should write down each of them and regularly review the list of defeats.
Do not arrange a self-flagellation session from this – it is better to simply admit that these errors were, and you will try to prevent them in the future.
At the same time, it is important to think not only about defeats, but also to praise yourself for how you overcome them and what you learned.
In the list of errors, it is necessary to describe not only the fact itself, but also a detailed analysis of the error. In marketing agencies, this analysis is called the “obituary of the project.”
Answer the following questions:
– what did I want to achieve?
– what was the result?
– what could be done better?
– How could this mistake be prevented?
– in what circumstances can such a mistake be repeated?
– how will I act next time?