Reasons why Start-Ups Fail | Philip Hofmacher | Skillshare
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2 Lessons (18m)
    • 1. Over 90% of Start-Ups Fail!

      0:45
    • 2. Problems Start-Ups face and Tips for you to make your Business Successful

      17:44
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About This Class

In this Class you learn:

  • why over 90% of Start-Ups fail
  • explanation of every mistakes Start-Ups make
  • tips and tricks to help you make your Start-Up Successful

Meet Your Teacher

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Philip Hofmacher

Online Marketer, #1 Skillshare Instructor in AUT

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Entrepreneurship Business

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Transcripts

1. Over 90% of Start-Ups Fail!: not 10 not 20. Not so not 40 not 50 not 60 not 70 not 80. But 90 year, 90% off. The startups fail, and this is a problem. This is a really problem. Why should you even start a business if nine out of 10 field in this video? Of course, we're going to talk about biggest problems. Why startups fail. We're going to give a lot off tips and advice how you're not going to fail. So let's become one off the 10%. 2. Problems Start-Ups face and Tips for you to make your Business Successful: welcome everybody. Right now, start ups are in. Startups are hip. Startups are 20 startups out of so called walk stars off the 21st century. Take road. They expand the raise millions of dollars. But start ups have also one problem. Yeah, I heard it. Over 90% of the startups fail and their different reasons We're going to talk about today. Exactly. So to make it really clear, nine out off, 10 startups fail. So therefore, if you have 10 ideas, you're only likely to succeed with one. So this doesn't mean that people start 10 ideas at the same time? No, They're going to start before an idea to fail it if they are really willing. If if they have to. In a spirit which I wish for all of you, then they're going to get back up and start with the next idea and so on. So this 90% of style of failed is only an estimated number. For sure you can't break it. And it's also very complicated to really save when a startup has failed. But let's say you build a business on, Do you work for it? 80 hours a week and you earn less with it than you get for a media job. So then probably it's also counted as a failure in this category. But let's get back to buy startups. Fail Clements. What's one reason you can think of five star fields? Yeah, I think one of the most important ones is the patient we were talking about working 80 hours a week, and that's left just a number. It's it's really true that when you're starting a startup, you have to put in a lot of work. And, yeah, I think many people starting a startup don't know that because many of them were employed before and compared to being employed. Building up a startup is really, really hard work until it works. And as we said, many of the startups fail, so it's not sure that it's going to work out. But at least you have to invest your time and your passion toe. Make sure you get the chance. What do you think? Why do people lose their passions off? Yeah, many reasons I think I think one of the most important ones is that they give up because the idea isn't working out as they want, and they think when they put in the work in a few months will work out. But in fact startups were, and in a very small stage, even some years after day they started. So it's hard to say when they will really grow or if they will grow. And I think many people having having some illusions and thinking, Yeah, it will work out some somehow. And don't think about the hard work you have to put in every day. Do you also think that people give up too easily because I see it for myself. I meet a lot of people that stop. They're passionate about it. The are in love of the business. But once it gets Twiki want, it gets hard months. They start to struggle to give up. Yeah, definitely think that's one of the biggest reasons, and yet it's important. I think it's a very important thing not to do it for the money because as a sent many startups fail and you have to do it, Yeah, for you especially want, you have to have to thrive to change something, and when you have that you have a chance to expand, gets bigger and if we don't have, they don't just think about your money and fame and stuff. It won't work out for sure. I want to come back to one thing regarding passion. That's at least what I believe. But I think you believe the same because you do it. I do both come from sports. So if I think that sportsmen can really become quit businessman because in sports, if you learned one thing is to never give up, we both played tennis. So if you lose the first set Syria six, you're not going to give up. You're going to fight back, going to come back, going to turn it around. I think this is some mentality, some passion, that you can transfer the business and you can really make this happen. You can really build on this, so I think the next thing by start ups fail is because that there's no market needed for the product. This means something like a lot of founders start building product from the ideas, so they keep the idea a secret Islamist possible the build and build and build and build and re modify old toe what they over their team thinks and then they're going toe hit market, Andi, Just only to find out here nobody likes it. So therefore what? I would advise you if you spill the style up business. Always talk to your customers. Always engage with them. Andi. Yeah. To really collect all the feet back to build a great product. Can you think of a way how to do this? How to really work with a company with your customers? Yeah, it's important. I would say the easiest way is think of a target group and asked them what they really like . You can do this On the one hand, you can go to them simply find out. For example, when you're private group studying, you can go to university and, yeah, just ask them What if they're interested in this product and lost all you can do it online . For example, in Facebook groups, yeah, try different ways one way, and that worked pretty well. Hurt is a creative idea. Think is create a Facebook group or create a number of Facebook groups and pay some ants, for example, 50 bucks, 100 bucks. And then you can see which group tracks attracts the most attention. And it's, I think, one easy way to test don't have to spend a lot of money. Of course, you need some, but to see how it works up, there's another great way that's done online. That's simply creating a landing page on saying, For example, if you want to make a video course on how to transform a passionate sportsman into businessman, we set up the landing page and we say, Hey, us Portman on dso on. We have a nice intro video set up the whole page and below we said the cause. It's only 200 bucks averella and we say bye now and we didn't even have to cost yet. But we say, Okay, they need toe by now on. Do we say it's 200 packs instead of 1000? And if they pay in front, we see okay people entrance that people are really thinking about buying. People are really willing to buy on, Then we can create it. That's kind off a pre sales model. Which brings me to the next point, which is Kickstarter To create a product, ran a Kickstarter campaign to see if your audience wants to buy. I think there's nothing better to have the money in front from the bias and then start producing it because the worst thing you can do is produce thousands off gadgets, tools or whatever and then sitting on them, and that's going to sell them to anybody. Yeah, I think very important. The next point should talk about is running out of cash because it's something I think many startups is the reason many startups fail. Yeah, one advice I would give you is to start small. So try an idea which you contest or split test with small amounts of money. So because when they put in a lot of money, of course, the risk is very high. And when you lose over and it doesn't work out for you, then, yeah, you're in big trouble. Yeah, also for running out of cash, especially for start up, it's very important to raise enough money. Montri raise money. Let's say okay with this company raising half a 1,000,000 now, but our goal was to raise, let's say, 750 k then raising less money could be a problem, because if we plan to come for the let's say the next year without raising additional money , and now we only have to sell off the money, and now we can only go for eight months. Then we probably will have problems getting the next round of investment on so time will passed by on once we can't pay, our bills were shut down, even though we're on the way to build something great. So always think mind, raise enough money, have a clear structure off when you're going to need how much money. Also, don't forget that the process of raising funds is something that takes couple of months. You're not going to say, OK, I'm going to waste some money just week, not even this month's This really takes time. So I think the next, um, finger want to talk about is the competition for sure. A lot off startups get out competed, but most of the times they don't only get out competed because the competition is too strong. Most of this points by start ups of businesses failed. Come hand in hand. For example, if you take a look at Nokia, someone could say, yet get out competed. They had a better product. They had bad marketing. They haven't bean innovative enough. Fact is Nokia most leading phone manufacturer. Then the iPhone came. Then smartphone came. Nokia wasn't really sure. If people want to have a camera in the phone on DSO, the kind off they lost drag on DNA. Now they are almost completely out of business. Think they already sold toe? Microsoft? Not sure, but at least they got salt, so they're not alone. Standing entity. Yeah, that's one thing should really keep in mind. That's what we mentioned before is really think about the target group at the market because, like mochi odd example, smartphones are coming. They're coming at this time, and Nokia simply didn't think about it. Or yet you felt it's not important. It's not a big friend, so it's really, really important to look at the market and always, yeah, look at the news and keep your eyes open. Another very important point. You need toe. Think off. It's the timing because the timing is the one thing that you can't change. You can change your product. You can change your customer target group. You can change almost anything, but you can't changed timing off the market. So for example, if you come up with a great product too early and people are not ready for it. So, for example, if you would have built as Snapchat 10 years ago, he wouldn't have had any chance, but also the same if you build it too late. So if you had the same idea, like even bigger from Snapchat head and your idea was to release it in 2017 you would have bean too late because Snapchat was already out there. They already claimed the market, So timing is so crucial. Timing is something you really can't calculate by yourself. You need to talkto ALOF expert. You need to goto exposed to conference us toe read newspapers to read online blocks to really have a feeling off what's going on right now and also what's coming in the future. And one of the important things is talking about Snapchat in the Internet business. It's Yeah, a rule the winner takes it all. So Snapchat has a big competition with Instagram now. And if they would have released their platform a being now 2017 and yeah, Instagram would have taken the market Maybe, And that's also one reason they would have been too late. Probably. Yeah, that's what you see with search engine optimization to take a look at Google and you search for, Let's say, buying a car in Paris, you will see 10 links off this 10 links. Probably the first link gets about 85 to 90% off the actual and D'Alimonte share it. If you on page two, you almost get nothing from pages. We were not even existing. So therefore, in the Internet this limited, it's really the winner takes it all and year. Also, this arena takes it. Old mentality can lead to some causes. Why startups fail, for example. It's the burnout sickness, because if you know that only the winner takes it all. You're very likely toe work to become the winner. But if you work to become the winner, and if you don't take some time off, if you don't have some ways, toe, um, we focus your point and so on you will get sick. You will get brownouts and all these things because today, with this things with the smart phones, all the information is always in our hands, so we can always get some push notification. We can always get all their infants we need. So therefore, we're really stressed Andi here, that's that's only one off. The reasons why Tim Ferriss mentions in his new book, The book Off as The Tools of the Titans that about 80% of all the successful people do any kind of meditation during the day. So even the use headspace, EPA's Take Seven and so on to simply make a short break to focus on that self to reflect intend to continue working. Yeah, I think that's one of the big challenges as well, because as Philip mentioned times of smart form and pink online, you can work 24 7 Really, Andi, It's very important to have a clear strategy when you work and when you get your time off, because, of course, you have to invest a lot of time. But you can't always push other percent and yeah, that's why we're human. So you have to think about another very important thing. By some startups. Fail are legal issues. So let's say for take a look at the A, P and B right now, they're getting attacked from legal issues or uber had also a lot off off issues in Paris and many other countries. So if this legal issues come to you in the beginning, once you're not that big, you really easy to stop. So therefore, legal issues can always kill a startup as well as something like a fight between co founders. We're not going to talk about this in detail because basically Clements and I building a business one day, we having a fight, we're not going to talk to each other. How shall be two videos together if the if you're not on the same level and were not happy with it, It doesn't make any sense to continue to business. Yeah, And there, of course, various numbers off reasons why you could get in fights. And I think one of the most important ones is that some people off the start up of working really hard in the other ones are not putting in as much. And so there are fights or there are problems. Yeah, I think that's one of the main reasons. And one thing I would really recommend you is when you have a great idea. I had this problem in the beginning to be honest that I thought when I publish this idea, someone else will take it. And, yeah, I will have a problem. And yeah, I don't have anything from it, but that's just 11 thing. You should, um yeah, be rare off in the beginning, of course. But when you have a team, you have to trust it. And of course, it can happen at any time. But you don't start. You won't get successful, so you have to risk their completely with you ideas. Only 1% execution, other 99 other percent. So talk about your idea. Collect feedback for it because ideas of off literally nothing. So it's also important, Sadly, by some startups fail is simply because they picked the wrong business model. The wrong business model can mean they have a great product, but the sale to the wrong people are. They have a great product to sell to the right people, but the cell too cheap to sell too expensive to sell in the wrong way. So there, some from the business model. You can really make quick adjustment specific, changing small things. For example, take a look at Netflix. What is Netflix doing? They're not going to sell you the product for all the time you use it. They're going to sell it to us. A subscription model. Think about it. Probably a subscription model with work for your business as well. Pretty sure if your coffee shop it's very hard to go if a subscription, when all you can drink model. But take a look at some Mongolia and barbecues. They also are firming. All you can eat on the I works there. Why shouldn't it work at Pizza Hut? December always be creative. This can be something that really makes it stand out from the crowd. So I think we talked about so many reasons. We talked about the wrong market, the wrong business model, running out off cash, being sick, a lack of passion, legal issues, the timing and many other things. As a project, I want you to clearly think about your business of what you're doing and think about what could happen to yourself and how you going to prevent it. So, for example, I create videos of sculpture, so my project could be what could happen to skill show. So, for example, skill share could run out of money and skills, you could go out of business. What will I do then? So there for my backup plan would be already built in audience diversified courses to our platforms and toe. I hope you like this class and see you soon. See you.