Why a startup fails top 12 Reasons
- No Market Need
- Ran Out Of Cash
- Not The Right Team
- Get Out Competed
- Pricing Cost Issue
- Lack of business model
- Poor marketing
- Poor Product
- Ignore Customer
- Product Mistimed
- Lack Of Passion
- Legal Challenges
In today’s competitive world you may have seen that most of the startups got closes in their first year. They have an idea, finance, and a team but still, the startup got closed. So, there are thousands of reasons behind the failure of any startup. But Most of the startup faces the same type of problems/reasons.
After some research, we found some common major problems that are faced by most startups. So let’s begin.
If you are planning to start your own venture so first you Must read all these 12 problems before starting up your venture to know why a startup fails.
1. No Market Need is the biggest reason why a startup fails
If you are producing something but there is no demand for that product in the market. So, it may your product is just a waste, it’s not useful for anyone. So, whenever you decide to start up your venture first you need to analyze the market need and make the product according to the market demand. It is very important to understand the market need of every entrepreneur. You can see that every successful business is successful because of its Product’s demand in the market and businesses are based on its product.
According to a survey 43% that’s why startup fails due to No market need
2. Ran out of Cash
We know that Cash is the blood of every business. Without cash no business can be survive in this competitive world. Every business requires some kind cash for their running expenditure. Cash is very important for every business so’ basically we have to built at least one source of cash it doesn’t matter what kind of business we are doing. There are lots of businesses that are failed due to lack of cash.
According to a survey 29% Startups are fails due to lack of cash
3. Not the right team is the reason why a startup fails.
A team is a group of people who work for achieving a common goal. If you are working with effective and efficient people then your chances of success increase because we know that in every startup there is a lack of resources and time. So, Choose wisely your founding member it is very important for any successful startup/business. A good always respect trust and care for each other members. If your team member is not passionate about your common goal then it may very risky for your startup so, choose wisely your team members.
According to a survey 19% that’s why a startup fails. due to dis-passionate team members.
4. Get out Competed by big Startup
In today’s world the competition in every field is highly raising every day the new companies come wit the new technologies in the market. So, if you are thinking to start something that already on the market so first you need to analyze your competitor. If you are trying to go into the field of cutthroat competition. So, it is very hard for a new startup hard to survive in the market because no one wants to lose their market share. So it is very important to choose the correct field for a new startup.
According to a survey 18%that’s why a startup fails, due to cutthroat competition in the market.
5. Pricing/Cost issue in new Startup
Generally, most of the startup faces pricing issue because of its cost of production. Sometimes there is demand for products but the customers are not able or willing to pay that amount for the product so try to make the product at an affordable price. Generally in new startups managing the cost of the production is the biggest task for every entrepreneur. In new startups cost of the product is high due to economic forces, including inflation, wages, salaries, and a small amount of production but a good entrepreneur still manages the pricing decision. Pricing decision is also very important for every startup because it will influence customer perception and buying behavior. So wisely decide your pricing policy.
According to a survey 18% that’s why a startup fails. due to their pricing issue
6. Poor quality product.
A quality product builds loyalty and trust in the mind of consumers. If the product creates its loyalty and trust in the mind of consumers then consumers start to recommend the product to others that generate new leads. Sometimes all the things in a startup are going to be in the right direction but the quality of the product is not satisfying the demand of the customer. That’s also the biggest reason behind the failure of any startup. So, creating quality products will be the most important thing for a startup.
According to a survey, 17% that’s why a startup fails. due to the cheap quality of the product.
7. Lack of business model of any startup
A business model refers to a business plan how they make a profit, how they deliver their product to the customer, who is the targeted customer and it also describes the company workflows. There are different types of business models. Generally, the startup founders not clear about the business model of how their company is working. Most of the startups work unofficial or in an unorganized way but this thing is very bad for a new startup. So’ making an organized business model for a new startup is mandatory for their success.
According to a survey 16% that’s why a startup fails. due to a lack of business model.
8. Poor Marketing by new startup
In simple words, marketing means, how a company represents its product in front of customers. Good Marketing is very important for every startup because marketing creates a long-lasting relationship with its customers and showing its product value in front of customers. It creates brand awareness and makes the business stand out. With the help of marketing companies easily creates awareness about their product and it also helps in understanding consumer behavior. A good marketing campaign is to create new leads. So we can say that marketing is a very big factor for every startup.
According to a survey 14% that’s why a startup fails due to poor marketing
9. Ignore Customer by the startup
All big companies have very well known that customer is the king. And the customer is a very important part of a business because a business creates all things for its customer. So, we need to understand the customer need, what customer wants and what they don’t want. Every successful startup to create consumer feedback loops is very important for a startup because it helps in understanding the product advantages and disadvantages. So, always try to be creating a better understanding with your consumer.
According to a survey, 14% that’s why a startup fails due to ignorance of customer
10. Product timing
In businesses timing also play a very important role every factor is important for success of a business But timing we can say that without right timing some another factors are nothing. When we enter in the market is very important for success of any product. A great entrepreneur always identifying the right time for their product It creates the right balance between demand and supply. Timing is everything for a successful startup. So, always try to be understood the right time for your product.
According to a survey 13% that’s why a startup fails due to their product mistimed.
11. Lack of Passion/Motivation
Generally, most of the startups are formed in an unofficial way with friends and family members. People have excitement in beginning but after some time some people lose their excitement because of a lack of passion and motivation. Passion is very important for a startup team member because when a person is passionate about their goal they never get tiered in working they will work with their best and always gives the better result. And passion always keeps the excitement in the people towards their goal and it builds the focus.
According to a survey 13% that’s why a startup fails due to lack of passion
12. Legal Challenges faces by startup
In some of the countries some legal issues face by startups.
- Licensing :- Licensing is one of the most common legal issue faced by startups. License depend on your work type and Area wise.
- Shareholder agreement: – If a startup have more than one investor the shareholder agreement is mandatory for the startup. Sometime in businesses some conflict arises so at that time agreement is very useful.
- Taxes & Government policies :- Some government policies is not fair for the startups and may government charge higher tax in some sectors.
- So read carefully all the government policies before starting
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