7 Common Mistakes Resulted In The Maximum B2B Startups' Failure

For staying prepared to encounter any situation, good or bad, with sheer ease, it is inevitable to understand why a lot of B2B startups crash as well as burn and what can be done for preventing business failures in your case. While structuring the startup, you wish to keep the general failure reasons into consideration so that you can anticipate, avoid, and compensate for them.

B2B refers to those businesses that sell to other businesses, instead of selling to customers. For instance, the marketing agency sells its services to other companies. Do you know that as per Bloomberg, 8 out of 10 entrepreneurs face failure within only 18 months of starting their company? However, these bare numbers are not meant for dissuading new entrepreneurs. Rather, they must serve as a reminder that an overly optimistic approach of ruining the B2B venture might not be in your best interest. Contemplating the worst possible result and planning tactics to compensate or avoid them can make a difference between you as well as that 80 % of unsuccessful entrepreneurs. 

Here are 7 common mistakes which failed maximum B2B startups – 

1.   Financial Complications – For the B2B startups, the aspect of investor funding becomes more important because of credit-based payments and long sales cycles. Facing issues with the cash flow can turn out to be the major reason behind your B2B startup failure and this is the last thing you want. That is why it is always suggested to pre-design the clear business model as well as cut out the clear allocation of budget estimates. 

Make it the practice for having the cash flow forecast ready for ascertaining when you will require the next round of funding, either from your savings, an investor or in the loan form. But, if your company is not producing revenue and requires new funds often, then it will fail. A lot of entrepreneurs aim a lot on the best product’s development. They consider handling finances to be dull and assign the same solely to the CFOs. However, as the startup CEO, you are required to have complete involvement in all facets of your company. 

2.   Uncertain Value Proposition – At times, it is not clear who the exact target audience is, what the company is selling, as well as the issue you resort to them. As crazy as it might sound, it is a typical scenario where you are in the market but still attempting to figure out what your product must look like or who the target customer is. 

Hivebeat, the business that developed the SaaS platform for companies stated the reason behind their B2B startup failure as, “We did try everything we wanted to and now we know what went wrong.”

• We fail in hitting real market/product fit as our company built the product which was too common for the very niche-based market. 

• We did have a much more attractive product as compared to the competitors, however, we always lack features in every niche. 

Get the first few customers on board as well as pay attention to their requirements. After having a good experience of dealing with those customers who belong to a particular market sector, you will gain a better understanding. 

3.   Market Issues – One of the Major causes of startup failures is the fact they encounter the issue of having no or little market for a built product. Its symptom is the unavailability of an appealing a compelling event or a value proposition for causing the customer to buy something. Also, your market timing could be wrong as you might be way ahead of the market by 1 or 2 years, and they may be not ready for the specific answer at this stage. 

The ultimate solution to this is doing thorough market research. Before you start working upon the “big project”, you should study the market you are about to enter. It is the most vital step for making sure that your customers might share your enthusiasm for the brilliant idea. A simple way to do the same is by studying those companies that provide the same services or products as yours. Focus groups and online surveys are precious tools that assist you to comprehend how the target market feels about your services or products.  

4.   Making Buying Decisions Too Risky – This comes under the category of the major causes of startup failures that tend to bother consultants selling services. Unless you are selling to the former employer who knows your abilities already, the buyer is taking the risk on the consulting business of your startup. The narrowly described starter project must be in the set of offerings. It has to be something that does not need too much commitment from the purchaser, doesn't cost a lot more than the budget of a buyer, and can be finished relatively instantly.

Always remember that it must be something that you shine at doing so that you make the customer happy on the first project. However, what if you are not the consultant but sell software? You, as well, should de-risk transactions. This is the reason why online cloud software has become a famous business model. Rather than needing the payment of thousands of dollars for the software license, the customer can do the signup process online within minutes as well as pay the modest monthly fee. 

5. Poor Management of Resources & Logistics – It emerges out as one of the most relevant causes of small business failures. Mismanagement of capital, logistics, and resources are what we look at as the most general factors of sinking the ship of a B2B company. Proper capital and resource allocation are always required at your business’s any stage but especially when the startup is taking baby steps. 

Never forget that your customers, as well as vendors, will have to face the aftermath of logistics’ mismanagement and this is a blunder that you cannot afford to make. So to avoid the same, choose automation. As you are unable to monitor the transportation, warehouse activity, etc. would be sensible of you to automate the notification and monitoring process. Also, evaluate the performance and structure of your organization. It will aid you to get an idea which section of your company should be taken care of on the priority. Along with this, plan the moves as per your assessment. 

6. Failure of Their Business Model – When it comes to small business failures, a major reason for the same is that the entrepreneurs are overly optimistic regarding how simple it will be to get customers. They suppose that building a compelling website, service, service, or product will be more than enough for getting the customers to their door. Yes, it might be successful in attracting the first few customers, however after that, it immediately becomes a costly task for appealing and winning customers, and in a lot of cases, the CAC (cost of acquiring a customer) is higher than LTV (lifetime value of customer). 

The easiest way for focusing on what matters in your company model is having a look at these 2 questions – 

• Are you able to find the scalable way of acquiring customers

• Can you monetize those customers at the relevantly higher level as compared to the acquisition cost

Always remember that thinking about the factors in such uncomplicated terms can prove to be helpful. 

7. Ignoring Customers – Needless to say, ignoring the customers is a true and tried way for failing in the market. Not gathering customer feedback and tunnel vision are lethal flaws for a majority of startups. One of the major business failure examples is stated by the web content management system company, eCrowds. According to them, “We invested way more time establishing our product for ourselves and did not pay much heed to get feedback from prospective customers. Do not go over 2 or 3 months from the beginning to get in the hands of potential customers that are objective.”

As a customer-focused B2B startup, you must spend enough time interacting with the customers and then rolling out those features which will cater to their desires as well as gather inputs from them. Like running a Shopify store and having live chat agents for Shopify to serve your customers as well as online visitors. Do not get tricked into thinking that what you are doing is the best for them but engage with your customers as well as to adapt to their requirements. 

There is no guarantee that despite the best efforts from your side, your business won’t fail but if armed with perseverance, positive attitude, and knowledge, you can avoid making your business one of the business failure examples. You must have heard about the growth of the B2B sphere however, succeeding as a startup in this field is not a piece of cake. While the above-mentioned are not the only mistakes that fail maximum startups, they cover a lot of major causes and what can be done for preventing the same. So, it is suggested to not focus on the negative side, but learn something and not making these mistakes in your case.