How to Prevent Your New Business From Becoming a Complete Failure

January 11, 2016, 5:41 PM UTC
Courtesy of Northwestern University

The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “How do you know it’s time to drop your startup idea?” is written by Linda Darragh, professor of entrepreneurial practice at the Kellogg School of Management at Northwestern University.

If the new product or service that you’re trying to launch suddenly looks disappointing, it could be problems with design, production, or lackluster responses from customers.

At this juncture, you wonder if you just need a little more time and patience, or if you should drop the idea altogether.

What is often a difficult and emotional decision becomes much easier and clearer if measurable goals and metrics have been put in place from the beginning. All along the development process, from the drawing board to A/B testing and beyond, metrics provide the cold, hard facts. For example, by measuring conversion rates (how many customers opt in) and churn rates (how many opt out), you gain insights into acceptance of your product or service.

Customer acquisition feedback may reveal that a new product or service isn’t getting the traction you’d hoped for because it isn’t perceived as addressing an urgent need. Customers see the product or service as “nice to have,” but not a “must-have.”

With measurable goals and metrics, you’re able to follow the startup wisdom about “failing fast” before devoting too many precious resources—namely time and money. Entrepreneurs who embrace “failing fast” approach the market with small experiments—making small adjustments or changing one variable at a time—in pursuit of market fit.

See also: Here’s How You Develop a Successful Business Idea

But failing fast doesn’t necessarily lead to a binary decision of “go” or “no go.” Failing fast is informative, pinpointing reasons why something didn’t work, and possible solutions for making sure something does work.

A low customer conversion rate may tell you it’s time to put the launch or startup on the proverbial back burner while you do further investigation about the problem you hope to solve. It may be that you’re too far ahead of the curve—customers may not be ready to adopt a product. For example, a precursor of the e-book reader tried to launch in 2001 before customers and the technology were ready.


I like to work with early stage ventures that are tackling big problems where there is considerable “pain,” and the team is passionate about solving that problem. I tell my students that it’s quite common for many startups to build the wrong solution for possibly the wrong customer early on. Teams that are driven by passion will continue to try and test solutions until they find something that works. For example, Edovo, which provides education and self-improvement tools for people affected by incarceration, went through a few iterations in its product line while enduring a long sales cycle. But perseverance and passion for solving the problem paid off, as Edovo just recently secured significant financing.

The decision to keep pressing ahead or shelve an idea should not be made at some final fork in the road. Rather, it’s an iterative process of testing and gathering feedback, using metrics to gauge the viability of an idea and the appeal of a solution to customers.

Linda Darragh is a professor of entrepreneurial practice and executive director of the Kellogg Innovation and Entrepreneurship Initiative (KIEI) and the Levy Entrepreneurial Institute at Kellogg School of Management at Northwestern University.

Read all responses to the Entrepreneur Insider question: How do you know it’s time to drop your startup idea?

What the Most Successful Founders Understand About Business by Vineet Madan, founder and CEO of Junction Education.

This Is Why So Many Startups Aren’t Successful by Avery Roth, founder and CEO of The Startup Consulting Group.

Your Personality Could Be the Reason Your Business Is Failing by Suneera Madhani, founder and CEO of Fattmerchant.

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