Top 10 Reasons Why Startups Fail

 

We have been working for many years now with Indian and global Startups and there are some common reasons we see why any startup fails. You may find one or many of them as the reason for a specific startup failure.

 

1. Ineffective understanding of market

Many founders do not really research the business problem they are solving adequately and validate the solution by talking to customers effectively. Their lack of understanding of what customers want or how the needs have changed, being focused more on their own concept of the product/service ultimately causes the startup to fail.

2. Business Model Failure 
If the founders have not figured out exactly what product/service they are offering, to which customer segment, the channels to approach customers, major partnerships, revenue streams, pricing and cost elements effectively,  then eventually the startup is bound to fail. Many founders do not have an open mind to assess who is their competitor from customer's perspective and build capabilities to compete effectively.

 

3. Founding Team Issues

Startups have better chances of success if you have a team which compliments each others skills and as a whole works in harmony. There are technical, financial, people, networking and many other skills needed to run a startup and it is rare that one single person will have them. Single founders work, but harmonious teams work better. Choosing the right mentors to guide the founding team is essential. 

 

4. Running out of Cash
Cash flow planning and being able to matching expenses with revenue streams especially during  expansion phase is an essential skill and mindset that founders need to cultivate. 

 

 

5. Poor Marketing
Many founders don't know even understand basics of digital marketing and may not be able to articulate, reach out to prospects or may spend way too much money trying to market to the wrong audience. 

 

6.  Faulty Customer Experience
World class startups have driven consumer experiences sky high in how easy and intuitive an app can be. Simple, easy to use and smart functionality is difficult to build. Deciding to drop features and screen components is hard to decide and that's what differentiates between excellent or mediocre consumer experience. 

 

7. Poor Business Focus
Many founders want to do too many things at the same time. Ideas need time to be executed effectively. Even great ideas falter if you don't adequately spend time growing it into a product/service which customers want. Perseverance in sticking to the plan is as necessary to success as having a great idea in the first place. 

 

8. Bad Debts
Choosing the right first few customers, especially in B2B startups is critical. If you carry out heavily discounted or free implementation for customers who eventually do not make promised payments, then your financial planning can go astray. 

 

9. Family and Friends Support 
In most cases, founders are working long days, probably weekends, without time for family and friends and financially this is generally a strenuous time. If founders do not create an understanding environment and manage expectation of their person time and do not get motivation to continue from their friends, then psychologically and emotionally they may find it difficult to continue to perform. 

 

10. Know when to Pivot
Most startups do not succeed on the first idea that they come up with. There are significant refinement to the initial idea, or even radical change in the industry that they operate in or problem they solve. Recognizing it's time to pivot is critical and being able to find out a step wise way to achieve that is essential for startups. Competitive landscape, technology capabilities and customer needs keep changing. If founders can detect and picot in time, chances of success are high!

 

 

Founding your own startup can become the life changing and enriching experience that we all dream of. Growing as individuals and professionals is possible in any startup journey with the right balance. AideExpert Advisory focuses on helping founders in this journey.

 

Please feel free to contact us if you are looking for any help or advice for your startup.

 

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