Navigating Market Saturation
Did you know that around 5.4 million applications were received to form a new business during 2021? This startling number is a 53% increase from 2019 statistics. Businesses are forming left and right due to minimal barriers to entry and simple startup procedures, leaving lasting impacts on the business world. Understanding contributing factors to the crowded entrepreneur world, the role investors play, and the lasting effects are critical when navigating the business realm as an investor or entrepreneur.
What Factors are Contributing to the Crowded Entrepreneur World?
The dramatic spike in new business applications is not a fluke in the system. Instead, economic factors can be directly linked. The first contributing factor is the recent pandemic. Many individuals were out of work, searching for a way to make ends meet. One of the viable solutions was to start a new business, especially with being stuck at home due to quarantine orders. Moreover, access to new technologies has made it incredibly easier to gain market share. One viral video can give a business the push needed to generate a steady income. Additionally, financial markets across the world were booming with entrepreneurs being able to secure startup funds and capital with a few clicks, contributing to the influx in new businesses.
What Role Do Investors Play?
Entrepreneurs are only contributing to half of the oversaturation issues with investors being on the other end. Money from pandemic relief, competitive pay increases and new job opportunities gives investors extra spending cash. Investors took this newfound money directly to the booming markets through investments in new stock and startup companies. Angel investors, venture capitalists and private investors were all on the prowl for the next big thing, giving new startups capital even if the business idea wasn’t feasible. According to recent statistics, around 90% of startups will fail in the first year with 2021 being no exception.
What are the Lasting Effects?
Market saturation leads to lasting effects for both entrepreneurs and investors. On the entrepreneur side, it becomes increasingly more difficult to start a successful business. Bad business ideas are flooding the market, taking away potential investors from startups with a great idea. Additionally, new startups are having a hard time attracting new customers and gaining market share because of the stiff competition. On the investor side of things, there are so many new startups to invest in that it gets overwhelming, leading to poor investing decisions. Moreover, the promotion of bad business ideas destroys great ideas lingering in the background.
Next Steps for Success
When dozens of new startups are popping up daily, you need to set yourself apart from other investors or entrepreneurs. One way to do this is to work with a consultant that guides you through the market, promoting solid business decisions. Divocate Consulting has worked with many entrepreneurs and investors, giving them the resources and insight needed to navigate market saturation. Reach out today for a consultant to see how our team of experts can lead you in the right direction.
