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Top 4 Reasons Why Startups Fail

Posted on the 27 July 2016 by Finoit Labs

If you are planning on starting up a business of your own, there are a lot of things that you must consider. As you will definitely be aware, you will need to do market research, create a business plan, evaluate various business models, find a way to fund your startup, brainstorm business ideas, find partners, and many other things., but knowing them is not everything when it comes to startups. This is a complex process, and even people with experience can make crucial mistakes that can lead to failure. Here are some of the most common reasons why startups fail-

Failed startup

1.   Unsustainable business model

One of the biggest mistakes fresh entrepreneurs make when it comes to their business models is that they take customers too lightly and expect that they will have great interest in what they have to offer. Most of them think that they can simply create a website, service or a product and that people will line up in front of their doorstep. This may be enough for a small number of people, but after a short period of time it becomes hard to attract customers and get them interested in what you have to offer.

wrong business model

2.   No market for what they have to offer

A major reason why startups fail is that they soon realize, after launching that there is quite a small market for what services or products they have to offer and their earlier assumptiions were wrong! Just because you think, or in fact have a great idea, it doesn’t mean that the market is ready for it. Think about touchscreen phones, even though the first ones came out in 1992, consumers were simply not ready to adopt such technology and it took around 15 years until this technology would come to life.

no market

3.   Poor management

A surprisingly common problem that leads to a lot of startups never developing involves management and management teams. Bad management teams build products or offer services for which there is no market, like we mentioned in the second reason. They also have very poor execution that leads with products being built later than expected or with flaws. Bad management will also assemble weak teams that cannot do their jobs properly as well. If the management is C quality, it can only hire D grade employees under them.

poor management

4.   Running out of money

The fourth most common reason for failure is that they simply dry out of money. One of the key tasks for starting entrepreneurs is to determine the amount of money that is needed to support a business during the startup phase. An owner needs to do a proper evaluation of all costs and get funding that can help the business reach its first breakthrough and become profitable. A lot of starting CEOs are driven by optimism instead of planning and they always get burned because of it.

less money

If a startup is to avoid failure, all of these mistakes should be carefully considered and planned in advance so that I doesn’t come down to them.

Finoit is a mobile app development company and helps startsups in bringing alive their product ideas. We have delivered over 200 mobile apps, and can be reached on [email protected] for any query/question.

Top 4 Reasons Why Startups Fail

Siya Carla

Siya is a social media enthusiast with a background as Web and UI designer, and is Social media manager of Finoit. She has deep inclination towards writing about emerging technologies,Web and Mobile app development and other technology related stuff.
Top 4 Reasons Why Startups Fail

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