8 Reasons Why Startups Fail

8 Reasons Why Startups Fail

Anuja Lath 13/04/2018 8

Startups are revolutionizing the marketing world. Every other day we hear about a budding startup! However, if the statistics are to be believed, half of the startups die out before completing a good tenure.

Few of them do succeed, however, the common notion that floats everywhere is that startups do fail. It is time for startups to follow some mantras to succeed.

Have you ever wondered why startups fail? Very often, startups come across challenges to get their product or service out there and market it to the right people at the right time. Other than this, there are many factors responsible for their failure, be it lack of originality or innovation.

Here are some of the reasons why startups fail:

Not Hiring the Best Individuals

One of the most common problems faced by startups is that they do not have access to experienced and highly skilled resources, unlike small and medium enterprises or big businesses for that matter. To run a business smoothly, it is essential to have resources who excel in their respective domains. Start ups might not take this into account and go for hiring amateurs instead. Unfortunately, this is of no good. 

Lack of Focus

Something that is often overlooked is the amount of focus that is required in carrying out tasks that are part of a bigger goal or objective. In the quest to obtain quick success, startup owners forget to specialize in a single domain. Instead, they spread themselves thin by taking on a number of different tasks which results in division of full attention to each task. 

No Customer Service

When you initiate a business, you should be available to accept continuous calls and queries about your business product/services. Very often, startups are not well equipped with the task of customer service, to address queries about their business. 

Well established enterprises have a separate team of customer service who are always active and prepared to handle any customer query.  

If possible, startups should try and initiate customer service to handle customer queries. Maybe you can assign a person instead of getting a team like for the big enterprises, purely for handling the customer service.  

No Planned Strategy

A planned business model is the mantra to success! Ask yourself the following questions: Who is your target audience? Can you evaluate if your existing marketing strategies are working? Do you even have a marketing strategy in place?

In order to enhance their online presence, startups often plan short-term goals without realizing long term consequences. Without strategizing, striving for success is futile.To succeed at a fast pace and make a mark online, startups neither have experienced professionals nor the time to plan out the strategy. This is where they lose to the big, established enterprises!

Creating a Product not Needed Anymore

One of the biggest mistakes a startup can make is to offer a product or service that nobody feels the need for. This can be due to lack of marketing research, miscalculations or a weak business model.

Creating a product or service that people do not feel the need to use is a complete waste of efforts and time. Creating the right product and service requires an in-depth analysis of the market. However, this involves large amount of funds, and is not something that most startups can afford. This bring us to our next point.

Lack of Funds

One of the global characteristics of startups is that they're always short on funds, whether its for resources, advertising, marketing or even manufacturing their products/services. With little scope for investment, startups often lack a continuous cash flow. According to statistics, lack of funds accounts for the third most common reason for startups to fail. Sometimes, this is also the same case with small businesses. 

Ineffective Marketing Campaigns

Startups may have created the perfect product or service for their target audience, but if they fail to deliver the marketing communication to the right audience, at the right place and at the right time, they will have a problem generating a reasonable footfall.

How one markets their products and services determines the success of their business. Again, with lack of funds, startups find it difficult to create and execute successful marketing campaigns. This is because effective marketing campaigns require funds, skilled resources and experience; none of which are readily present at startups.

Lack of Team Spirit

Starting a new venture with a completely new set of team members can be a daunting task. Lack of team spirit can have an adverse effect on the productivity of a startup. In the quest to reflect their dominance, team members often end up in a conflict. Hence, there is a need for a strong, determined team which has a mix of talents, such that they are sufficient to manage the startup.

We hope we were able to highlight the important reasons for startup failure. If we missed out on something, let us know in the comments below!

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  • Cheryl Smith

    Stop looking for ideas, start looking for great problems to solve.

  • Jamie Higgins

    Great advices

  • Sunil Sheth

    Thought provoking post

  • Chris Edwards

    The number 1 reason behind failure is lack of capital.

  • Lewis Watson

    Thank you very much for sharing this

  • Andrew Carlson

    A lot of startups simply don't have good ideas. It is okay to dream big, but also make sure that the dream is realistic.

  • Julie Garvin

    Great insights from this article.

  • Barry Kendrick

    I hope every young entrepreneur pays attention to what you wrote here on this post. We are experiencing a startup craze, but not enough education on what it really takes to launch and grow one.

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Anuja Lath

Digital Marketing Expert

Anuja is the Co-founder and CEO of RedAlkemi Online Pvt. Ltd., a digital marketing agency helping clients with their end to end online presence. Anuja has 30 years of work experience as a successful entrepreneur and has co-founded several ventures since 1986. She and her team are passionate about helping SMEs achieve measurable online success for their business. Anuja holds a Bachelors degree in Advertising from the Government College of Fine Arts, Chandigarh, India.


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