5 Reasons Why Your Start-Up Has Stopped Growing
Stagnating is a nightmare for any business owner. But even with an excellent product and a solid customer base, it happens more than you might expect. Especially when running a start-up. Start-ups are like very delicate, needy plants; they require careful and consistent nurturing in order to grow. As William S. Burroughs said, “when you stop growing, you start dying”. Of course, every business owner knows this, but it can be challenging to pinpoint exactly why your start-up has stopped flourishing.
To help you reach that satisfying sense of accomplishment again, it’s critical to identify and deal with the issue as soon as possible. Plateauing or stagnating doesn’t have to signal the end of the road, but if it’s left unchecked then it can cripple a business. There’s a good chance that there are several factors preventing your business from progressing to the next level, but to help you determine what they could be, let’s take a look at the five main reasons why your start-up might have stopped growing.
1. Product market fit
If your start-up has stopped growing, there’s a high probability that it’s due to a poor product market fit. It’s not just about having a great product, it needs to satisfy a strong demand in the market. This means really getting into the mind of the buyer persona and understanding how your product will address or solve a problem they’re having. When 42% of start-ups fail because there’s no market need for their product or services, can you really afford not to?
The general rule of thumb is this: if you ask your customer base if they would be “very disappointed” if your product was removed from the market and over 40% say they would be, then you’ve got yourself a brilliant product that fits the market. There are a lot of tests that you can do to determine your product market fit, but if there’s too much competition, your product is too niche, or you’re finding that customers are leaving after the trial, then it might be time to pivot.
One of the many brilliant things about running a start-up is the chance to pivot at an early stage. We take a look at this and other market tactics in our article on how to find your product market fit and what to do if you don’t.
2. Talent acquisition
Poor hiring decisions can have dire consequences. Maybe you’re still trying to do everything yourself, or maybe you’ve not hired the right people, but it all ends up coming back to you either way. For a small business to grow, business owners have to make the best use of their time. It goes without saying that incredible sales and marketing teams will push your business into new realms of growth, but it is just as important to have organised administrators and assistants. Having people in positions that help keep the business ticking is invaluable, so you can focus on growth plans rather than time-intensive tasks that can be carried out by someone else.
3. Lack of funds
If you fail to plan, you’re planning to fail. This nugget of wisdom can be incorporated into most scenarios, particularly in this one. One of the biggest mistakes that business owners make is to postpone the next round of funding too long and run out of money. At least 29% of start-ups fail because they ran out of money, so don’t wait until the last minute to seek more funding. Plan accordingly or you risk an extremely tight and stressful situation, where seeking funding essentially becomes the business owner’s full-time job. This is especially true with later-stage funding when venture capital firms and investors are looking for stability.
When you’re running a start-up, time is precious. They require much more effort and take up more time than big businesses that have fine-tuned their processes to a tee. While a strong team behind you will help alleviate the pressure and take on time-consuming tasks, their responsibilities are eventually going to grow too. And if they’re not growing, then that isn’t a good sign for your business or your employees. Tech solutions can automate processes that are usually done manually, such as payroll and live chat software. It always comes back to the customer experience, and with time freed up in other areas, your employees can give your customers the top-notch service needed to grow your start-up.
5. Ineffective marketing
A strong marketing plan is absolutely crucial for a start-up. Many start-ups have a limited marketing budget, but the growth of a business often depends on a solid marketing plan. It helps identify potential customers, lucrative channels, and the ways those channels and marketing efforts target said, customers. It increases visibility to your audience, introducing them to your excellent product while determining credibility.
Effective marketing is particularly important when considering a US market. The US market is competitive, risky, and lucrative. Get it right and you’ll see your company grow to dizzying heights. But for now, focus on growing your marketing presence. While salespeople typically source leads in other international markets, the US business landscape is slightly different – marketing produces most of the leads. And when US companies are spending an eye-watering $190 billion a year in advertising, 32% of the global spend, you don’t want to be the one underspending, ultimately left in the lurch.
Whatever is stopping your business from growing doesn’t have to be permanent. While plateauing is scary for business owners, it can lead to exciting and promising growth. It helps you identify what needs addressing early on before changes become too tricky. At Finerva, we have first-hand experience in growing a business and are dedicated to helping start-ups grow. If you’d like to find out more, get in touch for an informal chat about how we can help.
Nothing on this page is intended to be or should be construed or taken as accountancy, investment, tax or any other kind of advice. We recommend individuals and companies seek professional advice on their circumstances and matters.