Most budding entrepreneurs don’t realize that nine out of ten startups fail within 24 months. They only see and remember the recent new entrants in the billion dollar valuation club, including Uber, Airbnb, and Snapchat.
While last year was not a banner year for new businesses, the startup rate is still about one per minute, so you need more than luck to improve your odds of success.
I’m sure you understand that every new business starts with passion, and maybe even some deep domain experience, to fully appreciate a painful market need, with a large and growing set of customers with money for your solution.
A lot fewer have experience with the challenges and complexities of launching a startup. Fortunately, there are a wealth of resources out there to help.
One resource that’s worth your time is a new book, “The Ultimate Start-Up Guide,” by a couple of entrepreneurs and marketing experts who have been there, Tom Hogan and Carol Broadbent.
They offer a wealth of lessons and war stories, including strategies to avoid seven of the most common ways that startups fail, which I will paraphrase here from my own experience:
1. Resist the urge to build it just because you can
This is a common challenge for technical entrepreneurs, who are fascinated by what they can do with a new technology, and are revered by peers for their expertise.
The irony is that the average customer is afraid of any new technology, needs time, and may have a different view of the problem.
2. Add a buffer to your funding calculations
Money for new ventures is always harder to come by than you expect, so you tend to underestimate real requirements, or assume everything will go right the first time.
I recommend that you double your time estimates to raise money, and buffer the amount needed by at least fifty percent. You will still be short.
3. Keep your solution and your mission focused
After listening to customers, experts, friends, and your own dreams, it’s critical and difficult to narrow your focus to a solution and customer set that you can satisfy with limited startup resources.
Don’t try to be all things to all people. It’s important to do one thing well, rather than many things poorly.
4. Don’t assume your great solution will sell itself
“If we build it, they will come” only works in the “Field of Dreams” movie. In this age of information overload and the Internet, even the best solution needs marketing to get noticed.
Plan and budget for all the channels of marketing, including social media, digital content, video, and traditional.
5. Find co-founders to complement your expertise
Successes via a single dictatorial founder are even more rare than billion dollar valuations. We all have strengths and weaknesses, so you need to find partners and team members who can fill in your gaps.
If your strength is technical, find someone who has strengths in business and finance.
6. Assign high priority to team chemistry and culture
It’s one challenge to round up the talent you need, but quite another to mold them into a team that works well together, trusts each other, and is aligned with your values and priorities.
Without these key elements, you will find that a dysfunctional team won’t last even the minimum 24 months.
7. Never underestimate or ignore the competition
If you really believe that you have no competition, then you haven’t looked, or there is no market for your solution.
You need to know and use the competition as your benchmark, not to degrade them, but to highlight your competitive advantages to customers and investors. Position your barriers to entry.
Even with all these strategies, don’t be devastated if you fail on your first startup. In today’s culture, most investors are forgiving of failure, or actually see failure as an advantage the second time around, if you are humble and willing to share a few lessons learned.
Even Travis Kalanick, founder and CEO of Uber, filed for bankruptcy in his first startup, but obviously never gave up.
So if you want to improve your odds of joining the billion dollar club of new startups, don’t count wholly on your unique perspectives, or your personal amazing skills.
I recommend that you scan the world around you for as much guidance as you can get, and then quit dreaming and start executing. You don’t have to make the billion dollar club to be a success.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.