A recent search shows that about 80 – 90% of the new startup fail. Today, every startup has only one question i.e. “What are the reasons startups fail?”

Out of that Top 20 Reasons are,

    1. Unfit For Market – 

The biggest problem which encounters today’s startups is mismatched market needs. To avoid such cease in functionality, do the market research before finalizing the product or service.
As a startup, you should focus on the intricacies of problem solving solutions, rather than focusing on other factors.
“Right product with a right appeal, never fails.”

   2. Cash Crunch –

Some startups are getting over-funded and some are getting underfunded, it’s not the reason for Cash Crunch; the main reason of running out of cash is poorly managed cash earnings against expenditures.
For a startup, funding is not the only option when it runs out of cash, it’s your responsibility to grease the wheel of operations and sales, to maintain a healthy cash-flow.

   3. Stuck With The Wrong Team –

“A founder’s individual characteristics are important but what’s more important is that person’s ability to maintain & bring the focused, dedicated & experienced people in the team; the more the team is focused & dedicated, the more the firm will be likely to succeed.”

You should select your core team wisely, because those team members will be responsible for creating, building and nurturing your employees, work culture and composite growth. Make sure, you hire a cultural fit employee and deal with matter professionally.

Startup Failure Reason

   4. Gets Outcompeted –

The combination of factors like; ignorance/seriousness to the competition, lack of confidence or motivation from the team, or funding issues, cheap entrants, pricing, product quality, bad location, poor marketing, bad customer integration, and so on may throw you under the bus. You should pay enough attention to your competition using innovation and adopt the more user-centric approach to gain a competitive advantage.

Startup Failure Reason - Get's Outcompeted

   5. Pricing & Costing Issues –

Profitability is a simple equation between costs against price. If you set the price too high, your business won’t be able to compete; and if you set it too low, or your costs are too high, your business won’t be profitable. You can tackle these issues by formulating a pricing strategy according to the product demand and customer’s desire towards the product.

Startup Failure Reason

   6. User Unfriendly Product –

Business requires customers, and the customer seeks for a great experience. Every company is trying to offer them the same from its products or services; but, if the primary focus of the business isn’t on product quality & on its user-relevant features, it won’t create a great experience in the customer’s mind.

Reason of Startup Failure

   7. Product Without Business Model –

With the help of the Business Model, we can ascertain future of the business & it guides us in the process of making the business successful. Without a business model, VCs are likely to question if they will ever see a return on their investment, even if the startup has a great product or traction.

Reasons of Startup Failure

   8. Poor Marketing –

When you don’t have the right marketing strategy, you risk the growth & become directionless as a company. And this may waste your money on channels that aren’t bringing you results and losing out on potential customers to your competitors.

Startup Failure Reasons

   9. Ignore Customers –

For becoming a successful business venture, you need to focus on the customer with the great dedication. Being inflexible or neglecting customer feedback is a major reason behind the failure of startups. Customer feedback helps you understand level customer satisfaction towards the product and helps you in maintaining the customer loyalty. To avoid this reason, you must have to pay attention to your customers and adapt to their needs.

Startup Failure Reason

   10. Product Mis-Timed –

It’s very important to release a product at the right time. If you release your product too early, users may write it off as not good enough and be convincing them will be difficult if your product gets a negative impression. And if you release your product too late, you may have missed your window of opportunity in the market.

Startup Failure Reasons - 10

   11. Lose Focus –

The 11th factor leading you to failure is losing focus, becoming too occupied or self-absorbed from the primary goal, that you can’t even remember the purpose & idea behind the business. Branching out into multiple things too early will push you miles away from your main goal. You must set your goal realistic & you must achieve it.

Reasons of Startup Failure - 11

   12. Disharmony Among Team & Investor  –

The conflicts between Employees/ Founder/ Investors should not toxicate the in-between relations. In the case of founder disputes, the founder’s agreement, the shareholder agreement should be in place in advance to deal with matter professionally.

Startup Failure Reason - 12

   13. Pivot Gone Bad  –

Pivots can go remarkably well, or it might go wrong. It is important to check the progress regularly, and changes made accordingly to capture the market.

Reasons of Startup Failure - 13

   14. Lack Of Passion  –

Passion is unquestionably an important factor for a founder’s entrepreneurial journey it keeps you on track.

Reasons of Startup Failure - 14

   15. Failed Geographical Expansion  –

The location has to be congruent enough with the startup concept, Team & audience that it should brim the expectation of the market along with the team; the otherwise uninterested audience could be the reason for the failure.

Reasons of Startup Failure - 15

   16. Non Financing / Investor Interest  –

If you are looking for funds then go strategically, plan it much ahead of time, spend time on making your startup worth investing. You should ask funding for starting a business only when needed, otherwise funding only needs for scaling up your business.

Startup Failure Reason - 16

   17. Legal Challenges  –

It is the biggest mistake in the business when you don’t deal with legalities from the first step. Failing in solve the legal complexities from the starting is something that is vital to move forward and ultimately, has a great deal of success.

Reasons of Startup Failure

   18. Didn’t Use Network  –

The fact is you should network with the people who can truly make an impact on your company – investors, potential partners, and future employees, and most important potential customers. The reason we insist on doing this is because they can promote your products and help you create trust in the market.

Startup Failure Reasons - 18

   19. Work-Life Balance  –

Starting a business is hard and in most cases, even the most tempestuous people may get frustrated in the process, which could make them yield their shields in the battle background.

Reasons of Startup Failure - 19

   20. Failure Of Pivot  –

Launching (Pivoting) a product or company is one of the most challenging Tasks for a company which needs careful execution. Those two reasons are, if you make a mistake the world labels you as a failure, and the world doesn’t believe that you’d be able to make it either with the new product or company.

Startup Failure Reasons - 20

 

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