Reasons Why Startups Fail and What Should be Done to Avoid Them?

305 Views Updated: 19 Jul 2018
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Reasons Why Startups Fail and What Should be Done to Avoid Them?

Startups have been the hyped-up success story of the past decade, with a few new companies not just hitting it big, but changing the face of business in the process. But for every successful startup, countless others fail, sometimes mysteriously and often unnoticed.

A major reason why companies fail, is that they run into the problem of there being little or no market for the product that they have built.

We often hear about startup entrepreneurs lamenting their lack of network or investor connections so we were surprised to see that one of the reasons for failure was entrepreneurs who said they did not properly utilize their own network.

Sometimes a startup can evolve from a simple idea to a world of legal complexities that can prove to be a core cause of shutting down.


So here are some reasons why most startup fails:

Market Problems

The market timing is wrong. You could be ahead of your market by a few years, and they are not ready for your particular solution at this stage.

Business Model Failure

entrepreneurs are too optimistic about how easy it will be to acquire customers. They assume that because they will build an interesting web site, product, or service, that customers will beat a path to their door.

Poor Management Team

An incredibly common problem that causes startups to fail is a weak management team. A good management team will be smart enough to avoid above Reasons. Weak management teams make mistakes in multiple areas

Running out of Cash

A fourth major reason that startups fail is because they ran out of cash.

Product Problems

Another reason that companies fail is because they fail to develop a product that meets the market need. This can either be due to simple execution. Or it can be a far more strategic problem, which is a failure to achieve Product/Market fit.

To sum it all, “Startups fail when they are not solving a market problem. We were not solving a large enough problem that we could universally serve with a scalable solution. We had great technology, great data on shopping behavior, great reputation as a leader, great expertise, great advisors, etc, but what we didn’t have was technology or business model that solved a pain point in a scalable way.”

So now What Should be Done to Avoid Them? No idea! visit here.

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Posted by: aleyda.cohen Posts: (5) Opinions: (12) Points: 0 Rank: 0
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Answers (2)

A small business owner should mind the best way on how to make every part of his business profitable.

There is a new kind of monkey these days - the technology monkey. That sucker will bury us if we don't learn to deal with him.

As a small business counselor I have noticed there seems to be a belief that automation, the Internet and social networking can make the business succeed when in fact the real design of the enterprise itself is lacking (niche, market base, business plan, competitive analysis and financial forecasting)

I hear from many clients who ask, "What Now?" having launched an enterprise that is going nowhere because they are driving the tools and not the car.

I take them back to the garage; design the auto to see if it can run and then apply the wrenches retroactively if that is possible. It is usually a traumatic experience and could have been avoided with strategic and business planning before launch.

Below is a simple test to develop your potential idea for a business.

1. Do you have a product or service niche in mind?

2. Do you believe you have a market for 1 above and the means to reach it?

3. Are you willing to develop a business plan using the tool kit linked below to validate 1 and 2 above before you launch?

If the answer to the above questions is "Yes",use the below planning aids to design your business vehicle and the road map you intend to follow on your journey:

https://www.sba.gov/business-guide/10-steps-start-your-business/

  https://www.wired.com/2013/09/why-do-research-when-you-can-fail-fast-pivot-and-act-out-other-popular-startup-cliches/

https://www.bplans.com/sample_business_plans.php

When you have completed the above definition and planning process you will then be in a position to astutely select the tools you wish to use along the way and apply them successfully.

You will be able to network your vehicle, pick up riders as industry partners, and attract revenue fuel in the form of customers by marketing and social networking based on the thorough definition and content of your business plan.

In short, don’t let technology make a monkey out of you and your idea as well as raid your treasury before you launch.

Define your business vehicle and its journey first. Then pick the right technology tools to make a successful trip.

https://www.quora.com/profile/Ken-Larson-2/answers/Entrepreneurship

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