There are an infinite number of reasons why startup businesses fail. From lack of vision to burnout, a vast number of challenges will inevitably wash upon your shores, and some of them are strong enough to break you.
But in my estimation, there are 2 major failure factors above all others, and I’d like to share them with you:
Failure Reason 1: Market Problems
A major reason why soap and skin care companies fail, is that they run into the problem of their being little or no market for the product that they have crafted. There is not a compelling enough value proposition, or compelling event, to cause the buyer to actually commit to purchasing the products. This doesn’t mean that the market is flooded, or that soap and skin care products are too commodity driven. It means that the proprietor has not founded their company with a set of values to live by. A great story comes from an experience of values. If you don’t have them, your company will fail.
Failure Reason 2: Business Model Failure
After spending time with scores of startups, I realized that one of the most common causes of failure in the startup soap and skin care industry is that entrepreneurs are too optimistic about how easy it will be to acquire customers. They assume that because they craft an amazing product, that customers will beat a path to their door. That may happen with the first few customers, but after that, it rapidly becomes an expensive task to attract and win customers, and in many cases the cost of acquiring the customer is actually higher than the lifetime value of that customer.
The observation that you have to be able to acquire your customers for less money than they will generate in value of the lifetime of your relationship with them is stunningly obvious. Yet despite that, I see the vast majority of entrepreneurs failing to pay adequate attention to figuring out a realistic cost of customer acquisition.
Sit Down, Turn Everything Off and Make a Real Plan.
What if you spent an hour every day creating your future on paper? What if you planned, down to the penny, what next year’s budget is going to be for the dozens of fixed and variable expenses will be for your company?
What if you planned a 26-part payment plan to yourself that came out of your company’s revenue? What if you showcased on a notebook what it means for your company to function through a set of sincere and genuine values? And then, what if you transferred these notes onto your home/about page? Your marketing materials? What if you showcased to the world what you are all about from the work you did in solitude?
Not enough startups take the time to be silent and listen to their true calling. This isn’t some spiritual, airy-fairy stuff…this is what the most successful people in the world do. They put their phones down and shut their laptops and they create with only their minds, pen and paper.
If you don’t have a plan, you are doomed to fail.
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