Why Do Most Startups Fail?



While most business leaders preach about how you should follow you dreams and start your own company instead of working for someone else, helping them build their dream, while they pay so some decent remuneration, what is the real deal about startups? With so many young entrepreneurs and with so many new products in the market, the business world has become a dangerous mud swamp, swallowing those who lose to the competition. So why is it that even though many young individuals are opting to set up their own businesses, only a few manage to survive in the long run?

  • “The value of idea lies in the using of it.” A lot of people have good ideas, but is there a need for it in the current market dynamics? Also how many people are producing the same kind of product as you? What makes you better than all of them? Research your ideas, work on your strong points, eliminate the flaws, and strive to be different and better. Most of the startups fail because they get outcompeted; is your product providing an interesting solution to the problem that most people face? Would people be willing to spend their money on your product rather than the other products which offer to solve the same problem?
  • An idea isn’t enough to produce results; you have to figure out ways to turn that idea into a profitable product, keeping in mind the needs of the people and the market demand. The founders should have monetization strategy in place, from the very start. You may receive large initial investments, but without a convincing business model, you will fail to create a scalable business. Acquiring customers and retaining them. “You have to be able to acquire your customers for less money than they will generate in value of the lifetime of your relationship with them.” The greed to scale up to early can empty all your funds, and if you don’t have a backup plan, you are doomed.
  • The other very common reason why businesses fall apart is when the team isn’t working together, when you choose a wrong business partner, when your teammates lack passion or domain expertise, when your team puts in half-hearted efforts, when you just don’t have the right team. Lack of motivation or a common vision can never guarantee success.
  • While it is very important to have a proper business model it is also really important to maintain proper financial records. If you are sloppy to keeping numbers, you may run of finances due to improper allocation of funds, resorting to wrong sources of investments, or starting to invest aggressively ahead of revenue. As Warren Buffet said, “Rule No. 1: Never lose money. Rule No. 2: Never forget rule no. 1.”
  • Grabbing your customers’ attention is a very important. If you can’t tell it, you can’t sell it. How well are you advertising your product, improper promotions can turn off the customers or make them ignorant to your product completely. When they see your posters or your promotional video, you should be able to instill a sense of curiosity into their minds towards what you have to offer to them.

“I’d say most startups fail because the founders and the team don’t learn and pivot fast enough from what doesn’t work.”


Please enter your comment!
Please enter your name here