15 surprising reasons why startups fail

15 Surprising Reasons Why Startups Fail

Cloudswave The trusted place for software selection https://www.cloudswave.com

It starts with a simple question

What are the top reasons why startups fail?

Reason 1 Lack of consumer interest

90% of the time, Internet startups fail because of their inability to acquire and retain a substantial number of users.

“The market simply isn’t there.”

“Build it and they will come"

"Build it and they will come" is one major myth that has long been debunked.

No matter how great you think your product or service is

without consumer interest

without consumer interest, without enough people willing to pay you for it,

your business will soon die a natural death.

proven way to combat this, is validating your idea before plunging into the startup game head-on.

Reseon 2 Bad (or ill-timed) product

“Most ideas are bad,”

entrepreneurs gamble on hunches

and therefore, the proliferation of misguided ideas.

We all know what happens with products borne out of bad ideas

there are startups that got into the game ahead of their time.

"being early is the same as being wrong."

Reseon 3 Not having the right team

in the early days of a startup, there is no product.

what you have are a vision

and a team.

if the members of your team are not equipped with the right tools, skills, and mindset to bring your vision to fruition,

the likelihood of your startup gaining traction is minimal.

Remember, ideas are a dime a dozen.

It’s execution that carries far more weight.

Reason 4 Running out of money

imagine not having the financial means to pay the people who work for you.

the number one reason for startup failure is lack of funds.

running out of money as a “real momentum killer.”

Reason 5 Stiff competition

when startups enter the market

they’re confronted with two types of competition

direct and indirect.

Direct competitors offer the same product or service, market to the same geographical area, or use the same distribution channel.

Indirect competitors have the same product or service but operate in a different geographical area. Others offer a completely different

product or service for the same need your startup addresses.

Reason 6 Disharmony

36% of startup founders cited egotism as the reason their startups failed,

13% pointing to team or investor discord as the culprit.

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Reason 7 Bad business model

most failed business owners stop planning at the concept stage

The business plan should include details like operations, financial forecasting, funding, ramp-up, and logistics, among others.

Reason 8 Poor marketing

Marketing is about getting consumers to recognize the value of a brand, product, or service, engage with a target audience, showcase

industry expertise, and boost revenues.

In the case of failed startups:

They fail to hire the right people to do the marketing for them.

The distinctive competencies of their offering have not been clearly established. Neither is their positioning.

Not much user traction, therefore, not much word-of-mouth marketing.

The marketing strategy doesn’t fit.

leveraging your happy customers should come right after positioning and targeting.

Reason 9 Loss of focus

In the beginning are unbridled enthusiasm and a lone vision fueling many sleepless nights

as time flies by, some startups lose their focus.

the reasons contributing to this scenario include:

Too much passion

Too many visions

Investor expectations

Rapidly evolving technology, regulations, and political climate

Reason 10 Burnout

Burnout can happen to anyone

startup founders, after pouring all their time and energy into building their company from the ground up

are especially prone to it

Reason 11 Failure to change tack when faced with a roadblock

One essential trait startup leaders must possess

is the ability to regroup, tweak, or even change their business model midstream.

in a constantly changing business landscape,

flexibility is a winning startup characteristic.

Reason 12 Pricing vs. cost issues

When it comes to pricing your product or service

it’s a matter of finding just the right balance

Price it too low and, after expenses, you may not even earn a decent income.

Price it too high and you may turn people away.

“Without the related marketing, low price just sets low expectations.”

Reason 13 Bad location

For businesses with brick-and-mortar locations, this doesn’t need much explanation.

For Internet-based startups, your office location matters.

You’d want to set up shop in an area with the most talents, investors, and mentors.

If you work with remote workers from varying time zones

an effective communication and collaboration strategy is an imperative.

Reason 14 No investor interest

“You raise too little and you’re always chasing the next bridge loan or funding rounds to take your company to the next half-step.”

No cash, no investor interest – it’s not rocket science, really.

When there’s nothing left to spend and no funding to turn to

business failure becomes imminent.

Reason 15 Expanding too soon

“premature scaling,” is a situation when high-growth companies expand way before they’re ready.

This can come in the form of hiring too many employees

or raising the marketing budget before sustainable revenue is established.

Premature scaling is often a byproduct of the founders’ overzealous optimism.

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Nobody ever said that running a business is easy

let alone starting one from scratch.

failure can happen to anyone

you don’t have to reinvent the wheel

this presentation aims to help you do just that.

The End