Top 12 Reasons For The Failure Of Startups And Ways To Avoid Them

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Whether the matter is about market issues or the subject is concerned with running out of cash, following are certain techniques to stay away from declining for a startup organization.

Startup Failures - ThoughtfulMinds

It is tough to start up and the reason behind why 90% of startups fail in the span of just three years generates more dreadful scenario for startup companies. Brilliant business holders have a habit of learning and understanding from other’s faults and attempt to neglect such mistakes in their own startup companies.

Infographic showing top 12 reasons for the failure of startups:

Infographic On Startup Failure Reasons - ThoughtfulMinds

I have highlighted some of the most usual reasons for declining of a startup organization and techniques to ignore them from taking forward their dream.

#1 Troubles and Issues Related With Market

Marketplace drives every startup organization and the market has an unsettled issue or an opportunity crack which can be repaired with your idea and thereby, the startup can generate handsome money in the technique.

However, verifying the right market and trouble associated with it is not a simple task. In case you arrive at a point where you create a fixation for a dilemma which no one has made or is trivial, you risk missing all your attempts and resources into declination.

The demand for the fixation of any problem relies on your releasing time. Hotstar could have been unavoidably killed if it was launched in 2009, the time when smartphone and internet entering was very low.

Techniques to avoid:

Move to crowded places, discuss with people previous of beginning with your product development.

Make an appropriate and relevant research of your industry; it is cheap and easy to make modifications at the idea stage.


#2 Poor Management Team

Management is in most instances the brain and heart of an organization. Awful management can be demonstrated by weak policies and weak decisions, communication gap between management and team, very less work or almost no work on product market meet and possessing awful hiring systems.

Techniques to avoid:

Compelling people to be answerable to each other, decision assisted by data and not one-sided experiences.

Management must own its decision making and choices.

It is better to have over communication rather than under communication within the team.

#3 Business Model Failure

Business Model Failure - ThoughtfulMinds

Enterprise model is the backbone of every enterprise and explains the economic and commercial feasibility of your enterprise to generate money and worth. Certain organizations are so much concerned for the solution and so much engaged in the solution that they prioritize disregarding to the enterprise model. Unproductive and ineffective enterprise model is portrayed by high cost to attain customers, low or anonymous lifetime worth of customers and possessing no hierarchical methodologies to attain customers.

Techniques to avoid:

Examine or scrutinize in case your customer procurement policy is hierarchical.

Your CAC must truly be recovered from customers in the span of 1 year.

Examine and scrutinize your sales cycle and return on investment in a practical manner.

#4 Bad Product Experience

People are accustomed with wonderful connections like Gmail, slack, trello etc. Fascinating products such as WhatsApp, Zomato have carried out product building to the next stage and ruined the customers for infinity. Suppose your product has an awful connection, takes lot of time to execute, or take unnecessary clicks again and again than it would be difficult for you to get an edge in the marketplace. Your customers must be able to discriminate your product from competition not simply with regard to its worth but with regard to its experience too.

Techniques to avoid:

Avoid doing cost cutting and putting of beginner level ability to generate products.

The fact that Engineering and UX are some of the crucial aspects when the matter is about product building should be well understood.

#5 Poor Marketing

Poor Marketing - ThoughtfulMinds

A wonderful product can get declined in case it is not endorsed by sufficient marketing efforts. At present, marketing is not restricted to just making majority of people get familiar regarding your product characteristics. However, it is regarding generating marketing fundamentals within the products and examining the undiscovered destinations such as retargeting, influencer marketing etc.

Techniques to avoid:

Marketing must not start just when the product is accomplished, it must start much soon.

Marketing people must be engaged in product development and customer experience also.


#6 Disharmony Between Team Members

Founders and other team members are also human beings and every human being has some sort of emotions. Still, when it is about developing an enterprise self-focused thought and very emotional behavior can turn into a conflict which ultimately demolishes organization ethics, its worth and finally result into complete failure. The last thing which any startup or its investors would desire to watch is founder disagreement.

Techniques to avoid:

Each team member must realize that they are part of something huge.

The management must ensure employee disagreements are settled and company never hires any toxic elements. During hiring any type of employee, you must ensure that they are entirely fit with respect to culture, ethics and moral values.

Suppose any founder quarrel, then the founder’s agreement, the shareholder agreement must be kept in advance to cope with issue in professional way.

#7 Running Out of Cash

The business can survive due to continuous cash flow. Regardless of the fact how passionate you are, how many followers and users you possess or how wonderful your idea is, you will always require to reimburse the dues to your employees as well as marketing agencies and pay your bills.

Running Out Of Cash - ThoughtfulMinds

Certain business holders forget to maintain record of accounts and therefore forget to step forward sufficiently for some metrics on time.

There are some enterprises where other external investors and private equity firms offer funds. The founders must be truly aware of KPIs they require to display for next investment and their burn rate. Suppose you fail to receive KPIs and execute non thought via expenses with low ROI then this can turn the whole enterprise into the gutter.

Techniques to avoid:

Maintaining accounts record and track of how long organization can run along with present circumstances.

Suppose funds are needed then the CEO and management must perform early enough to look at all the funding choices and safeguard funds before the time its bit late.

You should try to preserve the KPIs record which the investors will check for in the other round of funding.

Stay in tune with more than one investor to boosts and encourage the odds of funding and develop a network as early as feasible.

#8 Lose Concentration

Founders are basically people who have idea and these people, most of the times moves ahead with ideas. In meaningful enterprises, this can turn into interruption and loss of resource. Certain startups try to broaden their offerings in earlier way or start to concentrate on majority of aspects at a time. Micromanagement can be considered as one big factor for lost concentration.

Techniques to avoid:

Maintain the concentration correctly and fix the chief troublesome issue earlier.

Don’t flow with the latest kinds of ideas or features.

Maintain a “to not do” list as well as “to do” list.

#9 Legal Challenges

The modern event concerned with Facebook and Cambridge Analytica prepares every enterprise to understand the worth of data security and customer privacy. Plethora of enterprises nowadays gets exposed to loads of legal challenges after they build. Each field can have distinct governing laws and startups must be, as a minimum be aware of them.

Legal Challenges - ThoughtfulMinds

Techniques to avoid:

You must consult with some experienced lawyer in order to save your time and money.

Maintain your organization and employee’s complaint with laws.

#10 Bad Debts

In early days, majority of startups approve to deal on credit and many times create the situations awful for the enterprise. Mostly, it is difficult to ignore credit appeals in order to display the earlier traction. In such cases, suppose the client receives sinful or undergoes into a financial crisis it’s your enterprise which takes pain.

Techniques to avoid:

Verify the client reputation before making a credit.

Carry out postdated cheques and in case bounce occurs then track the procedure to recover money from cheque bounce.

Consider about techniques and incentives for clients to recompense in advance.

#11 Burnouts

It is tough to execute a startup and many times even the most passionate people burnout in the procedure. Certain ideas can even take something around 2 years to turn fit for financial conditions and product market and work life equilibrium and hence could lead to severe hardship. Looking at your buddies creating decent money in corporate jobs, posting images of team members and family on an abroad vacation can even make you reconsider regarding your decisions. Majority of founders couldn’t carry out these burnouts and finally give up.

Techniques to avoid:

Avoid - ThoughtfulMinds

Ensure that you have equilibrium in work life and health must be first preference of business holders and bad health will finally ponder on your decision-making ability.

Try to realize that you are on a huge mission, your startup is your dream and might be you are one step behind from creating it.

#12 Failure to Pivot

Founders in most cases, fall in love with their ideas and solutions, and thereby become unsuccessful to pivot on them. Founders must always dedicate themselves on one major aspect and that is problem fixing. Google is fixing the problem of sorting world’s details and providing you the route to access it in easier manner. It improved from simply a directory to a brilliant search engine to digital helper.

Techniques to avoid:

Try to image the pivots as clear and evident development and not as hazards or risks.

Try to identify new, better and unique approaches to serve your customers.

Never try to fall in love with your answers and try to become customer centered.

Though it’s inevitable to fall into conditions framed above, it is the chief concern of a founder to ensure they take timely attempts to consider these.

If you are running a startup business and looking for various marketing strategies to survive and standout, get in touch with Thoughtful Minds, which is a one-stop solution for all your digital problem.