startups fail

14 Reasons Why 80% of the startups fail

January 25, 2020
by Satya Varshini
8 min read
58 Comments

When you start a business, it should let you earn what you don’t have rather than allowing you to lose what you have. Every startup owner wants to make it big, but only 1 out of every 30 startups make its mark in the market. Have you ever thought of starting your own business? Before that I would like to ask you one more thing, are you starting a business to escape your 9-5 job routine or out of passion? Entrepreneurship is the new trend, so most of the youngsters are turning towards business, but unfortunately, many factors come into the picture once you start your own business. To succeed as a startup and expand your business, you need to be aware of the common challenges that you might face during the starting years of your business. Here are the main reasons why most of the startups fail. 

Lack of Passion

Most of the entrepreneurs fail due to a lack of consistency in business efforts. Everyone starts with enthusiasm, but what makes the difference between a successful entrepreneur and an entrepreneur that failed is their passion for their work. When you are not serious about something, it is common that you slowly start losing interest, coming to startups most people lose interest when things are not going as per their expectations. Also, your team must be as passionate as you are because if your team start losing interest, they will stop working like before, which leads to the failure of startups. So they either end up in losses or shut down the company.

Poor Promotions

It does not matter how good your product is if no one knows about it, so create a buzz about your company or your product in the market. It takes a lot of time and efforts to gain popularity in the market, especially when you are a startup. Choose the right tools to promote your business so that you need not have to worry about your customers and your online presence. If you plan well and invest in the right channels, you will make a good profit out of it but most of the startups, due to lack of knowledge spend too much for nothing by just investing in wrong channels.

Market Place 

If you are a product based company, once do thorough research about the market and check if customers are showing interest in the products similar to that of your product. Before launching your product in the market, analyze the product as a user. It is better to check it with market experts and then take further steps. Sometimes you might be having the best products, but the customers might not have any use from it, or you may fail to explain to them how your product is useful for them.

Team Disputes

When you have 0-10 employees working for you, it will be easy to manage, but as the team increases to 50-100 employees, then you might encounter some small issues among employees due to opinion conflicts. It is common in every organization, but it should be considered and resolved as ignoring such issues might lead to the failure of the company in the long run. You need to be aware of what is happening in your organization and whats is happening with people in it so that you can settle and calm the disputes before it is too late.

Wrong Guidance

As a budding entrepreneur, there are plenty of chances that you might be misguided. You should be careful about who you are trusting. Check with few trustworthy before implementing any idea without jumping to conclusions. It’s better to have contacts with people who have started a business and are successful in it. You can also check with people who have failed as an entrepreneur so you can learn things that you need to take care of while developing your company.

Time Management

Time management is one tough thing while managing a whole organization, you need to be ready to sacrifice some years in your life during the starting years of your business as it requires a lot of attention and management. You need to balance your business development as well as have an eye on your competitors and the market. You need to regularly check if your company is meeting the market standards that the customers want and make the required improvements in the products you sell or the services you provide.

Poor Focus on Customers

Customers are the main asset to any organization. A successful organization is something that has a good client base and potential networking. Many startups do not realize the importance of having a potential customer contacts, so they do not follow up their customers which prevents them from getting the recurring business from their existing customers. Few successful organizations make sure to touch base or follow up their every customer from time to time so that customers get back to them whenever they have any requirement.

Business Model

You should not stick to a single business model unless you are sure that it brings you profits. 70% of the startups choose the wrong business model and end up losing the existing business and clients. It is okay to experiment and try new business models, but it is equally important to understand what is not working for you. You can also check out a few business models for startups so you can make an efficient choice for your business. Here are a few successful business models.

Lack of Ideology and Skills

You need to build the required skills before choosing to start a company. You will learn new skills with experience with time, but you need to start with at least a skillset that allows you to manage the business on your own. Most importantly, you need to have a great ideology of when to take the right step. The reason why startups fail is because of the lack of required skills or due to choosing the people who do not have a good skill set as resources to work for your organization.

Financial Crises

Invest wisely, it is common that you make some mistakes, but you need to understand what is worth investing. May startups run out of money after a few months as they are not sure about what they should invest in. Know the difference between investing and wasting, especially when you are in the starting stage of your career as an entrepreneur. When you start investing in too many additional tools and channels, you might run out of money soon. Here are a few tips you can follow as a startup.

Poor Leadership

Poor leadership is the root cause of business failure. You may have a fantastic skillset, but if you are bad at leading your team, you will have to face many downs as your business expands. There are hundreds of startups that have stopped the company due to lack of proper monitorization and bad leadership. You may think that it is easy to manage or lead a team of 50 to 100 but as the group increases you need to help them and lead them in a right way so that your company grows into a successful organization.

No Feedback

Most of the startups fail as they are not willing to take feedback from their customer. You need to understand that feedbacks help you to improve your business. In fact, you need to find ways to get feedback from users so that you will know how your product or services are useful or how you need to improve them, so it meets the requirements of the customers. Also, look at your product or service like an end-user so that you can find better ways to improve your business as you will understand the users perspective as well.

Bad Product or Service

Keep in mind that you are not selling a product just for making money. It should be a win-win for both you and the customer. You need to prove to them how your product or your services are going to make their life easy and fetch them profits. Only by showing yourself different from the other companies in the market that provide the same services, you can expect a customer to show interest in you. If you are not sure about your product or if you provide inadequate services to your customer then not only stop approaching you but also give bad revies so you might lose some potential clients. So make sure you provide the best possible to your customer.

Lack of Transparency

Many startups do not reveal that they are a startup company with the fear of losing a customer. Customers do not care much if you are a startup or a reputed company; in fact, their biggest concern would be regarding trust. If you maintain transparency with your customer, there are more chances that they will trust you, If you start making false statements about your business, they do not believe you or will not approach you further and you might lose a potential client.

I know it is quite a big blog, so I am concluding it here. If you are a business owner starting a new business, try to avoid the above mistakes so that you won’t be one among many failed entrepreneurs. Let me know your feedback through comments below or drop a message here. I am open to suggestions.

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Satya Varshini

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