5 Reasons Why Startups Fail

So you are thinking about starting your own business? Great! But before you dive head on into your new business venture, stop and think, ’will it work, what can go wrong, and how can I better prepare and improve my chances of success?’ Startups fail more often than not, so careful planning is a must if you want to succeed.

According to Bloomberg, your odds are stacked against you from the start; sadly 8 out of 10 entrepreneurs fail within their first 18 months of starting up their business. That’s a staggering 80%! Would you really want to be a part of this statistic?

Fortunately for you, we have the list of the most common reason why startups fail. So just maybe, you can avoid these tragedies by planning in advance, succeeding where other’s have failed.


1. Arrogance (85%)

Confidence or more specific overconfidence is crucial to keeping pace with your business and following through the critical steps needed to succeed in the initial phase. However, overconfidence could fester into arrogance. This is especially true if you supersede any and all information on the needs of the market, and instead, choosing your own personal ideas and needs, and misplacing them as the needs of the market.


Where start-ups fail through arrogance:

No Market Requirement 47%
Timing Off 13%
Poor/ No Business Model 17%
No Networking 8%


2. Narrow-Mindedness (55%)

A business aims to establish itself, to grow and to meet the need of the market it serves. It must plan with the expectation that it will meet this notion, and it must have a strategy developed to understand how possible to achieve the outcome. But, focusing too much on a plan and developed strategy may hinder the same very objective. The problem is that business is never linear, many changes occur that are hard to account for, there is a sense of unknown that must be acknowledged in business. When these new challenges arise, previously unidentified, then it is about adapting and taking opportunities as you see.


Where start-ups fail through narrow-mindedness:

Cash Flow Problems 29%
Pricing/Cost Issues 18%
No Finance 8%


3. Hubris (47%) 

Tear down any walls. What you offer may be great, but if the market has no idea your business, services, or product even exist, then you are going to fail hard. It’s crucial to get the word out… the marketing and sale team are critical for business success, they will be actively engaging in the target audience, creating brand awareness, leads, and hopefully sales. Don’t think that your business idea is above marketing, without an adequate marketing budget, and marketing strategy, you will simply see little if any custom. Your sales efforts go hand-in-hand with marketing too, so plan wisely.


Where start-ups fail through hubris:

Competition too Strong 19%
Poor Marketing Strategy 14%
Ignoring Customers Needs 14%


4. Egoism (36%) 

You’re only as good as the people you employ. The simple fact is that you don’t know everything, and that’s fine. You can leverage what you don’t know or understand with talented employees who do. This will fill the knowledge gaps, allowing your business to overcome challenges more efficiently and effectively. Specialist knowledge workers could also develop whole new ways of thinking, previously unused by the business, creating new opportunities.


Where start-ups fail through egoism:

Failing to employee crucial talent 23%
Disputes within Team/Investors 13%


5. Carelessness (34%)

A startup cannot make mistakes like the big established brands can do. A small brand has one moment to make a meaningful impression on its audience, any mishaps, poor product/service offering, poor marketing delivery, and customer service will reflect on the brand’s identity at this young stage. The perception will likely be that this is just ‘what the brand represents’ however further from the truth it may be. This stigma will be hard for it to ‘wash off’, causing ripples, especially through word-of-mouth exchanges taking place throughout the market.

It is, therefore, imperative at this young stage that the entrepreneur has an eye for detail, and make checks to maintain all aspects of quality assurance


Where start-ups fail through carelessness:

Poor product development 17%
Poor Location 9%
Legal Issues 8%


Data From market researcher: CB Insights


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