20 Reasons Why Startup Companies Fail

Share Button

The world of startups appears to be a magical place, a happy place to be. Startup companies seem to have all the fun. They create new markets, disrupt old ones, get ridiculous amounts of money from venture capital firms, throw wild launch parties, have the best-looking offices — the list goes on. But is it really that easy to reach startup stardom, or do these idyllic stereotypes hide a harsher truth?

Well indeed, the reality is quite harsh  because 90% of all startups fail. That sounds horrible, doesn’t it? Let’s just talk about what actually happens. The Venture Capital money counts for just 1% of total startup funding, as 82% of startups are self-funded and 24% of entrepreneurs rely on friends and family to keep their business dreams afloat. As for wild parties and lavish offices, the more extravagant they are, the more money is being thrown away, reducing the chance of success and abusing the trust of investors.

You must be keen to know why these accident happens? What is the main cause of death of 90% of startups?

There isn’t just one but several reasons which lead the failure of most startups:


1. No Market Need:

This is the most common reason which leads to the failure of startups. Usually startups do not have fresh ideas, they work on pre-existing ideas or on something completely new, which is not even required; therefore before working on a startup, a detailed survey must be conducted to reduce the chances of failure.

Relaed: New Business ideas for entrepreneurs

2. Ran out of cash:

Your idea might be new and innovative but in the absence of capital greatest of ideas sink. Startups must manage their funds wisely, and maintain a budget from the beginning.

Related: How to raise capital for your startup

3. Not the right team:

A perfect team is desirable not only for a startup but everything. And with the lack of appropriate personnel, not only  a startup, but a settled business can also fail.

4. Get Out competed:

A startup needs to be constantly worked upon. New ideas and innovations must be brought up timely or else someone else might just overshadow you.

5. Pricing/Cost Issues:

It happens with most startups,that they become unable to solve pricing or cost related issues. And as a result, the startup comes to a halt.

6. Poor Product:

The quality of the product plays a major role. Your startup may survive in the beginning but with poor product quality, it tends to become a failure.

7. Need/Lack of business model:

A perfect plan must be devised from the very beginning of the startup. In the lack of an appropriate plan, the startup develops problems.

Related:First steps to start a startup after an idea

8. Poor Marketing:

Marketing is really important for any business to flourish. If people won’t know about you, they won’t choose you.

9. Ignore Customers:

Customers must be treated well. If you can’t keep your customers, you certainly cannot keep the startup.

10. Product mistimed:

The product must be launched at the right time, for the right people and at the right place.

11. Lose Focus:

At times, the team members become disinterest and lose their focus. This contributes to the failure of the startup.

12. Disharmony on team/investors:

In any startup, the key is trust. If there is disharmony among team members, then the startup wouldn’t last long.

13. Pivot gone bad:

It’s very important for a startup to keep up to what it’s aim is. Losing the central aim leads to losing the success.

14. Lack of passion:

No task can be accomplished without passion. There isn’t any point of working in a startup with the lack of passion.

15. Bad Location:

Having a suitable location is always desirable. The startup office must be at a place which is reachable.

 16. No financing:

Forget the success, its impossible to start any business without any capital.

Related: How to get funding from PM Modi startup scheme

17. Legal Challenges:

At times, startups fail to meet the standard norms and are shut down by the government.

18. No using advisors:

Seeking expert help and guidance is just not a bad idea. Infact, with the lack of help, startups tend to fail.

19. Burn out:

Startups can be quite exhaustive and lead to burn outs.

20. Failure to pivot:

At times startups fail to deliver what they are expected to and ultimately come to a halt.

Share Button