Discussions on the failure rate of startups don’t necessarily paint a bright picture. Forbes put this number at around 90 percent, while the U.S. Bureau of Labor Statistics state that about 50 percent of new startups fail within five years. Another study by CB Insights shows that startups usually fail within 20 months after their last funding round.
At the end of the day, regardless of which source you believe, failure is still a likely conclusion if you choose to enter the world of entrepreneurship. Sure, learning from failures is a great way to find your path to success, but some mistakes can completely stunt the growth of your business, if not shut it down for good.
As for virtual startups, business-ending mistakes are easily avoidable as long as you are aware of them:
Building the wrong team
One of the advantages of running a virtual startup is access to the global talent pool. With online listing platforms and freelance marketplaces, you can find the manpower you need to make your startup a reality. Despite this, 23 percent of startups still fail due to having the wrong people on their team.
To avoid this, take a closer look at your hiring process and make sure you have accurate job descriptions when posting on listing sites like Craigslist and Indeed. For creative skills such as writing, web design and photography, look for candidates with an online portfolio or a comprehensive LinkedIn profile so you can see their work in action.
As a startup, you may think you’re safe from hackers because you have little customer data to protect. However, statistics show that 43 percent of cyber attacks target startups and small businesses. To make things worse, 60 percent of those small businesses die within six months following a cyber attack.
To protect your vulnerable startup during its early stages, it’s important to invest in cost-effective security solutions such as anti-malware software, a web application firewall and remote backup services. Since you’ll be hiring remote employees, discourage them from using public Wi-Fi networks unless you have an enterprise-grade VPN for encryption.
Not using collaboration platforms
In order for remote teams to function, you need to provide them with the tools necessary for communication and collaboration. Aside from email services and instant messaging software, you also need a project management platform such as Basecamp or Asana.
Project management platforms offer features such as project tracking, task management and scheduling to keep everyone on the same page. For smaller teams, another popular choice is Trello, which allows you to quickly organize projects, delegate tasks and set deadlines.
Not having a lead capture strategy
Your online presence means everything, especially if the nature of your business requires you to cater to customers online. Building traffic to your site is only the first step. To give your business some traction, you also need a lead capture strategy that can turn your visitors into subscribers and, eventually, paying customers.
Fortunately, you can have all the pieces of a solid lead capture strategy with tools like OptinMonster and GetResponse. Also pay attention to the factors that affect user experience on your website. You can refer to this post for more tips on boosting conversions.
It doesn’t matter if you’re a virtual business that completely operates online. A close company culture is vital to the growth of any company. When the time comes, try to arrange a face-to-face meeting with your team, brainstorm expansion strategies and discuss ideas that can help you function together as a single unit.
Of course, there are some cases where this is impractical or nearly impossible; say, if you hire freelancers from different parts of the world. To overcome the distance barrier, you can utilize web conferencing tools such as Skype for Business or Meet by Google Hangouts.
Pivoting too early
Once your virtual business starts getting results, it might be tempting to pivot and pursue strategies for substantial growth, such as moving to a physical office or needlessly branching out to new markets. Without a proper, data-driven pivot strategy, you might end up sacrificing your progress for something unrealistic.
Take note that pivoting too early is the reason behind 10 percent of all startup deaths. At the same time, failing to pivot when the right opportunity comes may also prevent you from attaining that much-needed growth. The key is to look at the telltale signs for the need to pivot, such as the consistent feedback from customers, stagnant profits and so on.
Virtual work conclusion
A virtual startup is just as fragile as any other business. As long as you can avoid the startup mistakes described above, you should be able to keep your business alive and see your brand truly take off.