Skip to main content
Asked a question 3 years ago

Why do startups Fail?

Where am I?

In StartupTalky you can ask and answer questions and share your experience with others!

Countless startups fail every year. But there are certain reasons which cause them to fail. Some of them are listed below -

Weak execution

Most of startups fail due to poor could execution in a timely manner or  due to lack of judgment. Sometimes, entrepreneurs work too hard on product/service features but too little with the market. They try to incorporate too many features in their product that takes time. They do not launch in time and as a result it's hard enough to build a user/customer base. 

The other possible reasons could be failure to manage expenditures, to identify opportunities, etc.

Poor Management Team

Management is most of the times the heart and brain of a company. Poor management is a result of weak strategic decisions, communication gap between management and team, little or no work on product market fit and having bad hiring systems. The manage must be attentive enough for the proper execution.

Running Out Of Cash

Cashflow keeps the business alive. We can also call it spine of the business. No matter how passionate you are, how many users/customers you have or how great your idea is, you still need to pay dues to your employees, marketing agencies and clear your bills.

Some entrepreneurs fail to keep a record of accounts and hence fail to take adequate measures on time.

Poor Marketing

A great product is of no use if it hasn't reached the interested users. Nowadays marketing is not limited only to making more and more people aware about your product’s features but it is about creating marketing elements within the products and exploring unexplored venues. The marketing team must fulfill their responsibility otherwise they can fail miserably.

Rajnish SharmaTop Contributor
Content Creator || Android App Developer

Many startups fail because new and risky ideas are by design failure prone.

New ideas fail everywhere with a high probability. If the risk of failure were not there someone else would have done that already. Startups by design take those ideas that have a slim chance of success.

As a startup founder you are entering a lonely coast known for tsunamis. You might drown by the huge wave or might actually catch a huge amount of fish (that no one else is taking).

You are trying to put a completely new concept or a new market and assemble a group of people who might not have worked together. While they might have studied together, working together is a different ball game. There is no process to hold the discipline and no brand to lean on. The cash cushion is not big enough to withstand multiple failures and the executives might have no experience wading through tough times. There is no real HR process to manage talent and no good financial management. There is no established relationship with customers and no established channels. Product quality is often poor in the early days and customer support not as professional.

It is just a miracle that some startups even succeed. Startups that got incredibly lucky being at the right time with the right people succeeded. Most others with similar capabilities died.

And many of the startups that die should not have existed in the first place. It might be a feeble attempt by a group of people who might have met at a meetup and decided to try something for a few months. Or a lone ranger trying to build the next big thing. Or some new grads who try something before getting a good job.

For startups with founders who have experience, connections and a team, the failure rate is not as high. The failure rate is just proportional to the risk of the idea itself.