Determination is vital in the world of entrepreneurship. However, sometimes startup failure is inevitable. It’s important to know when to pull the plug on your startup in order to avoid wasting time on an idea that isn’t working.
For every brilliant startup idea, there are nine less impressive ones trudging along, trying to make it in a market saturated by Silicon Valley.
The problem with founding a startup is that you’re working on something that has never been done before. There are no success rates to forewarn potential failure, or a group of customers to market to in the search for success. As a result, the odds are stacked against you.
As a startup entrepreneur, it’s important to show determination to succeed – it took time for companies like Instagram and Airbnb to take off. However, it is also important that you can recognise when an idea just isn’t working.
How to recognise when you’re heading for startup failure
Stop wasting time on something that nobody wants. Startup failure isn’t the end of the world. In fact, it is respected in startup capital Silicon Valley, as you’re more likely to be successful in your next attempt to crack the business world.
If you’re unsure whether it’s time to throw in the towel, just ask yourself whether these reflect your business:
Employee turnover is high
Employees constantly jumping ship isn’t a good sign. A high level of employee turnover could mean a number of things, from an unmanageable workload to poor company culture, but whatever the reason, it is undoubtedly negative.
Resources are drying up
Startups need to make money to survive, either through selling a product or service, or acquiring funds through investors that are confident the company will eventually turn a profit. Ultimately, if you’re struggling to make money, it means that there is no interest in what you’re doing.
Progression is non-existent
You can’t be a garage startup forever. It may be early days, but you should always be working towards the completion of your next goal. A startup should be constantly moving, or face being left behind by competitors. Stagnation either means that you lack interest in what you’re doing, or there is no room to innovative in your chosen field.
My startup is failing. Now what?
You’ve spent the last three years working on your game-changing idea. Thousands (if not millions) has been invested in building a product and your team are now working tirelessly to get it into the hands of your target audience. Yet, nobody comes. Your money is running low and staff are losing belief that it will be a success.
If you’re confident that you’ve tried everything possible to solve the issues plaguing your company, it’s probably time to give up on your venture.
Don’t wait until your money runs out. If your startup isn’t working, pull the plug on it as soon as possible. By waiting, you’re only wasting more of your time on an idea that is destined to fail eventually.
“Pull the plug sooner than later. Don’t waste your time on a startup effort that’s going to fail anyway,” serial entrepreneur Neil Patel explains. “Once you get the hunch that things are spiralling downwards, pull out the hatchet, make the cut and walk away.”
Move on and focus your time and energy on something else. It is extremely important that you don’t let a failed business discourage you from trying again. Those that have previously failed in the startup world have a 20% chance of succeeding with their next venture, compared to the 18% chance of first-time entrepreneurs.
I’m important to see failure as a valuable lesson learnt. It may have cost you time and money, but so does a university education. Thankfully, the knowledge that you have gained is just as valuable and will help you to make sure that you don’t make the same mistake next time round.