10 common reasons behind the failure of startups
The world is full of stories that showcase how in a span of a few months or few years, some companies in the tech industry went from obscurity to failure. Since these start-ups fail, there are some common underlying reasons for this result. These are some of the major causes that many start-ups and entrepreneurs face:
- Lack of clear vision- Startups start off with great ambitions, however, it is very hard for them to fulfill their dream if they don’t have a clear vision or a goal. There are so many uncertainties that come with building and selling your company, especially when you’re a new entrepreneur. You will be tested on whether or not you were able to make such a huge impact in an innovation-driven industry. All of these can only be made possible if you have clear vision from the start and continue to maintain this vision.
- Ill-defined product or market – There are certain products that you can perfectly aspire for and productize in a way that no competitor has done before. Before going on with your business, you must figure out the market that you want to serve. You should find out what problems these people have and how you can make them feel that they are needed. Your product must provide the solution for them as soon as possible.
- Bad timing or opportunity – One of the main reasons why startups fail is because they fail to take advantage of a unique opportunity in their business, which may not come up again in their lifetime if they miss it now.
- The lack of a strong team – One of the strengths of startups is that they have a small and capable team. However, this could also be the reason why startups fail because they do not have enough people to sustain their growth. You will further need other people to help you meet all your goals, such as a sales manager and a financial analyst.
- Unclear business model – Another reason why startups fail is because they are not able to execute their business model right away. This could be due to many reasons, such as the uncertainty in setting up partnerships with other companies or institutions or undervaluing their product in a given market.
- Lack of funding – If you want your startup to succeed, you need enough funding to do so. You may not have this in the beginning of your business and that is OK. However, if you fail to get the needed amount of capital, then your business can be put on hold, which will lead to failure if there will be no progress in the end.
- Lack of managerial skills – Successful startups need a visionary leader who has the experience and skills necessary to grow a company from scratch into an international brand. It is also important for a visionary leader to have interpersonal skills that will help him or her build a great team that can support his or her grand vision for the company.
- Lack of passion – For startups to succeed, it is important that they have a founder or entrepreneurs that are passionate about what they do. Passionate founders will always find a way out to make their startup work and will always be determined to reach success.
- Having unrealistic expectations – No entrepreneur can predict how their business will turn out in the end. There are so many risks and difficulties that they encounter, particularly in the first few months of operation. This means that the risks must be prepared for by proper planning and resources allocation.
- Burn out – Startup founders are aware of how challenging it is to launch and grow a company. They have to put in hundreds of hours of hard work and long hours in the office just to make it happen. These conditions can eventually take a toll on their lives, causing them to become so burnt out that they will not be able to get out of this condition even after years have passed.
To avoid these common reasons for startups that fail, you should do your homework and do some research about the market trends, the most potential business opportunities and your capabilities as an entrepreneur.