Top Reasons why Startups Fail

They start off with a big bang – throwing wild parties, celebrate the conglomeration of intelligent young minds, and launching plush offices..and the list goes on. However, the reality is indeed harsh. The fact stands as of today that 90% of all startups fail. Period. Do you know why that happens? We will tell you the top reasons what makes majority of the startups being unsuccessful and close their shutters.

Running out of cash

If you don’t budget your startup properly with a long term planning, you are likely to run into trouble soon. Lack of adequate budgeting and at the same time, the burn rate being quite high does the irreversible damage.

running out of cash

Not having a business plan at all or having an incomplete one coupled with a lack of foresight for fulfilling the capital requirements of your startup can be catastrophic to your startup. So in case you are thinking that you are good with having 95% of the necessary capital, think again. The reality is that you need 100% for a great start in your new venture!

Unable to understand the market requirement

If the market doesn’t understand your product or it doesn’t need the product, or it even doesn’t know about it, in that case it is a real threat to your survival. That is the reason why it’s so significant to do market research before launching your product in the market. This becomes quite often one of the underestimated top Reasons why startups fail.

If your startup keeps the development of your product too close to your chest instead of readily involving test customers during the early phase, it is bound to affect and be the killer of your business. So make sure that the entire team is involved interacting with the prospective customers and test the existing market scenario in your niche well before creating your first prototype.

Lack of Fire-brand Team

There are ample ways due to which a founding team falls short of its mission and ultimate objectives.

team work

Inadequate leadership, operational failures, and lack of consistent efforts in the right directions can be quite catastrophic to the entire machinery of the startup. There could also be such cases wherein team members are not able to ‘work hard and work smart’ over the long haul together and are also quite poor in execution of their ideas. The team doesn’t have what it takes.

Expanding too fast

Over expanding your business can actually kill it instead of growing it. If your startup is growing too quickly, it is expected that there will be a variety of issues and problems associated with it including dissatisfied customers and shrinking profit margins. If in case you have been experiencing such type of growth related issues, dealing with it should be your immediate concern instead of lingering it. Smart Growth is desirable. Hiring talented and experienced staff is essential to carry out the operations with precision. Maintaining a healthy cash flow is vital for the company otherwise the cash flow can diminish exponentially and endanger the survival of your startup.

Outcompeted by your closest competitors

In this ever-changing market of cut throat competition, if you are left behind in the race, it’s tough to recover. To avoid this situation, outlearn your competitor in order to build a better product. Stay ahead of your competitors which might include big brands with an established identity and reputation.

competitionBe sure that you don’t end up making your competitors your burden…in fact build a better product and make your efforts to have an edge over the others with its unique features. Note that what is working and what’s not working for your competitors. If you miss this, there are bound to be future problems. Ask yourself – what you’re doing that no one else is doing and what are you doing differently to catch their attention?

Lack of marketing your product

It is highly recommended to carve out a well thought marketing strategy for promoting your products and spread the word about it with a planned marketing strategy. After investing a lot of money and umpteen hours of hard work, you have to understand the significance of promoting your product amongst your prospective customer base.

lack of marketing

If you are not making sure to regularly check the existing clients on a regular basis, supporting them while keeping an eye on their changing demands, you could be facing a lot many issues in the future. Not been able to evolve new ways of procuring more customers can eventually stagnate your growth as a startup.

Piloting a ship without an accurate map can for sure sink your ship. No one wants to end up getting stuck on a sinking vessel. So make all your efforts to be the captain who is familiar and well versed to the waters for cruising it smoothly. In case your startup fails, it’s important to analyze and start thinking about the reasons things didn’t fall in place. This way you will be definitely increase the chances of making it in your next venture.

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