Mere weeks before the holiday season began, American toy retailer Toys R Us filed for Chapter 11 bankruptcy protection amid crippling debts, declining sales, and relentless competition from retail powerhouses.

This incident can be a rich source of lessons for startups who wish to avoid a similar fate. To stay relevant and profitable, startups can consider the following pieces of advice.

1. Lead with your greatest strength
Last year, the baby products category accounted for 36 percent of the total US revenue of Toys R Us, representing the company’s biggest share of domestic product sales. This suggests that baby products—and not toys—are the ....