Common Reasons Why Startups Fail

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Ideas don’t make money, their execution does. Every year many ambitious entrepreneurs come up with groundbreaking ideas they think will solve all the world’s problems, but unfortunately, many of them never last long enough to see the light of the day. 

It’s not only about how talented the entrepreneur is, or what the product is. There are many other reasons that may or may not be in the control of the management. Thus, it is important for entrepreneurs to be prepared and learn from the mistakes of others. 

Here are a few common reasons why startups fail, and what organizations can do to avoid them. 

Lack of Market Demand 

It is one of the primary reasons why startups fail. When they don’t tackle a current market issue, or address an existing gap in the market, they fail to find enough customers. Many organizations believe that their creation is very engaging and that their product or services will be of immense interest. However, if the product is of no use to the customers, there will be no market demand for it. 

To avoid this issue, startups should consider doing market research before launching the product/service to understand the demand for it. 

Insufficient funds

Many startups fail because of insufficient funds or finding a source for additional capital. As there is no answer to how much one needs to spend on the business and hence due to insufficient funds so they end up shutting down their startups. 

Therefore, entrepreneurs should consider cutting down their costs or finding additional sources of capital through venture capitalists or loans. 

Never Underestimate Competitors 

Many startups underestimate their competitor’s potential so they lose against their rivals. So there needs to be a balance between over concern and ignorance. Good research about the competitor’s practices will help the startup to follow the best ones. 

Lack of sustainable model 

Startups that lack a sustainable business model will not last for a long time. They don’t have a clear vision which eventually is not viable in the long run. Hence, these startups fail to succeed.

Another reason is that when these kinds of startups often misinterpret what the actual market need is and they end up shutting down. 

Proper Knowledge 

A team with different skill sets is very critical for the success of the organization. Many startup founders cannot do what is needed for a business to turn fruitful. Both the founder as well as his or her team should focus on those industries which are not matched with their skill sets and academic background. The skills that they have ought to be complemented with that of the group. Disharmony in the team and among investors would not help the business take off in the long run which will fail. 

Customer satisfaction

Many startups ignore their customer’s needs as they spend way too much building our product, often forgetting to get feedback from them from time to time across stages of product development will let a company down. 


Timing is also one factor that determines if a startup would be successful or not as we see in the case of Airbnb as it came right during the stature of the downturn when people required additional cash and that may have helped people overcome their issue of renting out their home to an outsider. 

With the startup boom, everyone wants to utilize the opportunity, but only a few are succeeding and In case you are keen on building a startup company. You need to know these 7 main reasons why new businesses fail to reach success. After understanding these reasons you ought to ideally realize what to search for as you explore your organization to progress and it will be helpful for you to make your startup successful. 
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