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Top 21 reasons why startups fail

Top 21 reasons why startups fail

Friday August 24, 2018,

4 min Read

Every business owner out there is well aware of the fact how much of a struggle opening a startup business can be. There are so many different challenges that pretty much every startup owner faces, especially in the beginning. However, having an insight into some of the most common reasons why startups fail and having an opportunity to learn from others’ mistakes can help you prevent them from happening to you:

1. Overly saturated market

The number one reason why startups don’t make it is that entrepreneurs fail to understand the market they are trying to cater to and its actual needs.

2. Not having enough funds

Besides not having capital of their own, a great number of entrepreneurs mentioned lack of investors as their reason for failure.

3. Not having the right people

Having the right team is of a crucial importance, especially in the beginning. You need people who are not only skilled but also passionate about their work.

4. Failing to stay competitive

Once a product or an idea becomes popular, everyone will try to get in on the train. Not being aware of your competition will take you two steps behind of it.

5. Low-quality products or services

Often time people rely too much on marketing, thinking that even if the product is not perfect, a good marketing campaign will make people want it. If your product or service is user unfriendly in any way and if it doesn’t reflect the needs of customers, people won’t buy it.

6. Not designing an adequate business model

Having an amazing product or service is good, but staying locked in a single channel or having no idea how to scale your business will leave you investors hesitant, to say the least.

7. Bad marketing choices

Having the wrong idea of who your target audience is and how to grab their attention will leave you with little to no leads and customers.

8. Failing to keep your customers satisfied

Ignoring customers’ feedback is another common reason why companies fail. If your customers have something to say to you, listen.

9. Bad timing

Mistiming when to release your new product or service might render it useless to your clients.

10. Sticking to some ideas no matter how bad they are

Success in business requires you to adapt yourself to some extent to the market’s needs. The world is changing by the minute, and if you don’t adapt accordingly you will probably perish.

11. Lack of motivation

Lack of motivation accounts for about 9% of why startups fail according to some experts. This is why it is important to have people who are passionate about their field.

12. Lack of focus

Another common reason why startups fail is that people get sidetracked by personal problems or side projects. If you wish to succeed, you have to keep your eyes on the prize.

13. Not establishing strong relationships

Another common reason for failure is running out of cash because you didn’t make strong connections with your investors.

14. Ignoring the work-life balance

The dangers of burnout are real and they can have severe consequences on your health, employee satisfaction, as well as the choices you make.

15. Poor networking

Many entrepreneurs complain how they failed because they didn’t use their network properly.

16. Failing to comply with legal regulations

A lot of stuff can go wrong when you don’t comply with legal regulations, so be sure to consult an expert before making any big decisions.

17. Running out of cash

Another no-brainer. Most people underestimate the amount of capital they will need just to get past the first few months. As a result, companies end up lacking funds hallway through a marketing campaign, for example.

18. Location issues

Location can be a problem for many reasons. It can hinder communication, but more than that, the company’s concept sometimes simply doesn’t scale geographically.

19. Bad pivoting

Pivots aren’t necessarily bad for your company, but pivoting for the sake of pivots is usually a bad idea. Pivoting requires some serious planning and changing of your current business model.

20. Bad pricing

Setting your prices a little bit too high or too low might quickly cost you your business. Research competitors’ pricing of similar products or services before setting your own.

21. Focusing on profits only

No one likes companies that focus only on making money. People want someone who cares about them and not only about profits.

To sum up, these are some of the most common mistakes people make in running a startup, so let’s learn from others’ mistakes and don’t repeat them.