11 Reasons Why Startups Fail?

why startups fail

Learning from failure is always a good idea but it is better to know why startups fail earlier and what can make you face failure. If you are also planning for a startup or engaged in a startup which is not giving you positive results, you should pay attention over the list of reasons that can, unfortunately, fail your startup. The reason behind the failure of a startup can be anything; founder blames investors, CEOs, marketing tricks and R&D process behind failure but never goes to the real root of failure.  In order to avoid catastrophic failure of your startup, you should keep some leading reasons in mind that can work in this direction and avoid all those reasons while managing the startup.

1. Lack of unique solutions

Now it’s time to move on the conventionally known line that everything that can be invented has been invented already. Now, the world has become full of problems and every problem requires a unique and effective solution for it. Your startup should also be based on an effective solution for the problems you are dealing with.

2. Running out of finance

Whenever you plan a startup, be sure that you have or you will have enough inflow of finance for investment in resources. Lots of reasons are there that can make you run out of cash such as improper budget management, ineffective planning to raise funds and excess expenditure or even combination of these reasons.

3. Mere concepts

Many entrepreneurs are there who just lay down their startup on the basis of a concept and don’t work upon the complete product. This makes your planning weak. Definitely concepts, ideas and inventions can be impressive but consumers visit market only to buy the final product, not your concept.

4. Weak strategy

When you are going to start a business, never expect any miracle to happen. Your success lies in your strategy and it’s proper implementation on every level. Even small things can make the big difference for a successful business positively or negatively. Using low cost but good quality material, smart infrastructure and adequate availability of components will leave you as a successful entrepreneur.

5. Tough competition

The modern world revolves around lots of competition and passionate entrepreneurs. You should never evaluate the power of your competitors lesser and be ready to face them as they will not give up easily. Your startup will surely be challenged when other well-established businesses dealing with same solutions (your startup is engaged with) are highly successful.  You should be ready with your unique marketing and management tools to secure your unique place here.

reasons why startups fail

6. A wrong team

A team of founders and initial employees of a startup matters a lot regarding the success of a startup. If you are starting your venture with a wrong team, it may cause a big loss. If your team has no sense of urgency, time management, discipline, expertise in their fields, unfit functional values and not enough finance to invest, it’s a red flag that your startup is in danger.

7. Entertaining wrong advice

It is one of the biggest things to keep in mind as this is a major reason to work behind the failure of most of the startups. With the day by day increasing information sources, the quantity of advice is in hike but the quality of the same has been fallen. Entertaining bad pieces of advice from unqualified sources is also a reason for the failure of many startups.

8. Lack of communication with customers

Failure in the product of right product is among those leading reasons for which your startup fails to be recognized by customers. This happens due to lack of communication and feedback from customers. If you are unable to know what your customers want actually, how you will be able to produce something which is in demand. If you have not a compelling business plan, event, value proposition to make your buyers ready for the commitment of shopping your products, it will become hard for your startup to stand exclusively for a long time in the market.

9. Lack of market need

The market need for the product or service you are dealing with is the biggest demand for a successful startup. If you have not carried out good research in knowing the demand of the market and evaluating the level of demand for products you are manufacturing, it will not be possible to catch traffic of customers. Working on a product or service which is not actually in demand in the market is just wasting your time and money.

10. No business plan

Are you also among those entrepreneurs who are going to plan a startup without any log term business plan? If yes, beware! You are going towards the wrong direction; your customers will not be impressed at all if you will talk all about the present features of your products. They want you to be focused on future planning too so that they can have a base to bind a long term professional relationship with you. It is mandatory to tell your customers that where you want to take the company otherwise lack of required traction will result in failure of a startup.

11. Improper marketing

Marketing is the backbone of a business. Even a small mistake in marketing and promotion of your products can give rise to a big loss. Most of the entrepreneurs think that VCs are the whole market they have and they leave each and everything on them. Well, it is a wrong thinking that consumers will automatically love your products. You will have to represent before customers that why should they love your products and how they will be benefitted by investing their hard earned money in your products. It is important to explain the fundamental respect of selling you have planned.

So you might have understood now that if your startup fails, you should invest time to understand what went wrong. This kind of conclusion will help you to exclude the reasons of your failure next time. Plan your next venture by excluding all the flaws and lacks you had earlier in your failed startup. Be hopeful enough to achieve the success.

Kamlesh Mourya

Author: Kamlesh Mourya

Kamlesh Mourya is the director of 7eyetechnologies; an India based IT Company that provides services web development, designing and online marketing. Kamlesh occasionally blogs about social media.

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