Why does startup fail? Why is the rate of failure consistently high? Every startup is unique, and its problems are also unique. I would like to list few common problems in this article why startup fails generally?

1.Why startup fails-Losing focus:

Generally, traveling on a bumpy road is risky and tiresome. For instance, a long journey where You just know only destiny.

• Don’t know the route how to reach the destiny.
• Don’t have GPS on hand to set the destination and follow.
• Day and night journey on hills.
• No highway, it’s a long bumpy road.

Imagine, how difficult the journey is going to be. It is quite common for anyone to lose the focus at some point in time. However, a big hope + self-confidence + patience are the three entrepreneur qualities which should drive to destiny, of course, your fuel is equal to funds 🙂

Every startup founder and core team member need a lot of energy, motivation, and patience as there is no guarantee for success. Consequently, when there is no guarantee, why do we need to start it up? Well, nothing is guaranteed in the life, it’s just a hope. If the founder loses the hope it effects startup very badly, so losing focus is one of the reasons to fails your startup.

2.Starting very big:

Every mom start feeding her kid with a smaller quantity starts with milk and gradually increases to solid food after six months. Why? Since baby’s little digestion system improves slowly. Similarly, I would suggest don’t attempt to implement the whole idea at one shot for below reasons.

1. Time to market is critical, as long as the product gets delayed to hit the market, your burn rate will be high with not returns.
2. If you go big, you need to burn big. Eventually, if it fails, you will end up lose big money either.

Develop a minimum viable product, pitch into the market, understand customer problems, start little revenues, address the problems in the next phase, Enhance with new requirements, this is the right cycle to follow. We usually call it as Lean Model for startups.

3.Ignoring basics:

Stick to basics: I believe in this, what is basic? It is a key behavior. We have basics for mathematics, science, personality, business and startups either. Sticking to basics will keep you on the ground, this is one more important reasons why startup fails.

4.Pricing & cost:

Pricing plays a vital role in a product success. It should be derived based on customer need, competition, the target set of customers and their buying capability and need of your product. If the pricing doesn’t consider any of these parameters you will end up fixing a wrong tag which leads to a product failure.

5.Market penetration:

Selling a product is harder than developing a product. Though you have the right product, If you fail to sell, create a customer base, letting the customer know about your existence, it leads to big disaster. So you need to have a strong marketing strategy to penetrate and reach to the right set of clients.

6.Good Team:

Establish a core team is another bigger activity and one of the reasons why startup fails. Finding resources with a good attitude and various skill set which the startup demands are a nightmare. Team members who have below qualities would lead your startup to failure.

• Team member with the wrong attitude.
• People who have a pure employee mindset.
• Lack of honesty.
• Contributing less time.
• The regular conflict between employees.
• Lack of adaptability.
• Having people who are not capable enough to deliver.

7.Lack of Planning:

To my knowledge planning is tuning your mind to re-plan your existing plan. However, lack of a basic plan is a danger. What is a plan? The plan is a combination of reality, assumptions, todo list, projections, and risks. When you need the plan to execute the small project, don’t you think a clear plan to implement a startup? Unfortunately, lack of planning, wrong business model, the wrong business strategy is contributing most startup failures across the globe.

8.Running out of cash:

Running out of cash is a common problem why startup fails. The startup is not an existing business to execute. Burn rate will be very high as you have to build from scratch. If you don’t plan the budget from prototype stage to until product penetration of the market, you are at risk. The majority of the times you could raise funds only when your business generate the revenue, this is a bitter truth every entrepreneur should understand as investor expects returns on his investment.

9.The quality of the product:

Every startup founder has to keep one thing in mind, either the product costs one dollar or $1000 customer expects quality. Certainly, no customer would expect $1000 quality for a dollar. Consequently, if your product doesn’t meet the minimum requirement of the client, it leads to failure.

These are the reasons why startup fails

Also Read: 7 Potential tips How to turn failed startups into success

Narasimha Mohan

He is the Author, Product Specialist, Business Consultant, Entrepreneur, Public Speaker, Thought provoking writer, and Joke writer. Follow him on Twitter