Top 10 Reasons Startups Face Failure

Top 10 Reasons Startups Face Failure 1

Every year thousands of startups fail, and lots of great ideas bury down. With some research and talks with founders, we learned that most startups have common mistakes and lack of some abilities, make them failed. Some of them are very simple that you can’t sometimes imagine you may forget them, but they come so damagingly when they happen to be missed.

Errors like not enough researching, lack of proper customer service, product qualities, etc. are among them, which result in serious damages to the company.

Using CBInsights statistics, we made this list ready for you to help you prevent failure and save your idea to get lost.

No Market Need (42%):

Near to half of the startups’ failures roots back in not paying attention to what market needs. This huge percentage is showing that startups, have to focus on what is the actual market needs, instead of assuming to solve problems which are their favorite fields. They need to look around and see what their market is demanding.

By not focusing on this factor, the effort, and money a startup is going to spend on their projects will seemingly join that 42% of failures.

When you’re producing something which is not demanded by the market or not solving a significant problem in the market, no matter how good it is, there’s no customer for that so it will lead to a significant loss.

Running Out Of Cash (29%):

The second primary reason why startups fail is about money. It may be because of the low amount of fundings at the beginning or about the poor managing of the cash the company already gained.

We’ve talked about the importance of managing the money a startup has to be aware of, here. The leading case is to be patient, and if you are not able to handle the company’s financial situation professionally, then you need to hire an expert to help you with that.

Wrong Team (23%):

Coherence and unity is the beating heart of a successful team. It will make them motivated to focus on their tasks and will result in high efficiency and profit for both the company and its employees.

A mutual vision both in the team and the startup’s goals, plus different talents and skills (of course it should be according to the needs of the company) will lead an empathy which results in success and lets your startup to avoid joining the 23% failure other startups are dealing with.

Being Outcompeted (19%):

Even though startup shouldn’t pay attention to the competition, totally forgetting the competition will cost them failures. The fact that some ideas are golden, so they get trendy and create a fertile market in terms of competitors. While always thinking about the competitors is not something entirely professional, ignoring and forgetting them is a matter of failure for 19% of startups.

Pricing Problems (18%):

18% of failure for not being able to put a proper price on products is resonating the importance of pricing management.

Most of the startups are struggling to put the right price on their products, it means they’re planning on putting high enough prices to target and hold a valuable margin for the company and to afford operating expenses. At the same time, they understand the need to price their products low enough to attract more customers.

Weak Product (17%):

A product which is not matching the needs of customers the way they expect or is not on par with the general qualities of the market it’s aiming to join on is not going to bring positive results for a startup, as 17% of them are failing for this reason.

It’s critical for a startup to be aware of their target customers and their needs. Whether it is going to solve a problem or bring a new quality to the market, it needs to, at least, be created and designed according to the business standards and conditions, if it’s not going to be in a higher level.

No Business Model (17%):

A business model like finding ways to scale the business, plan to invest on cash generating programs, having different plans so if one failed you can go for plan B, etc. are all needed for a company to survive.

A dynamic and comprehensive business plan will also entice investors to raise funds for your company. If there’s no transparent business model, no matter how good your idea or product is, Investors will likely show not much interest in your project since they want to be sure about their ROI.

Poor Marketing (14%):

Effective marketing relies on proper market research. At the same time that you find the right product for the right market, you need to learn about how to target and entice the audience’s attention. Turning the attracted audience into customers is one of the critical skills every startup needs to be successful.

Being unable to promote your product and not paying attention to marketing can cast considerable damage to your company.

Not Paying Attention To Customers (14%):

A company’s wheels are empowered by its customers, thus ignoring them will stop the wheels from turning. Startups which don’t care about the feedbacks and have poor customer services are amongst 14% of failed companies.

Founders should notice that they’re creating a service or a product for the customers, not themselves.

Poor Timing For Product (13%):

Timing for releasing a product or service counts as the 10th major reason startups get failed. If a company delay the releasing time of their product, it will disappoint customers and also will affect their trust in the company. To fix it up, the company sometimes need to add some extras and fix almost every bugs or problem which occurred the delay, and it mostly costs very much.

Also, if a product released too early, customers may underestimate it as a mature and functional product.

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