15 Reasons Why 90% of New Startups Fail

An analysis of 353 failed startups

No market need

This factor is responsible for 42% of the startup's failure because there is no need for the product or service. Entrepreneurs do not take time to research their market to find a gap they can fill.

Running out of cash

We all maintain some amount of cash in our pockets to meet our daily transactions need. We need to buy milk, groceries, mobile load, fuel expenses, and other living.

Lack of financing

Business needs money for expansion and growth. But it is not easy to attract investors and venture capitalists for a startup business. If it is a company, an individual, or an angel investor, they first analyze whether your idea is feasible or not. The 8% out of 353 startups failed due to not having enough capital and investors.

Poor marketing

You got a brilliant idea and did the market research, and your product is ready but, what if no one knows about you and your business.

Team and investors conflict

Sometimes management team and founder want to run a business in a different direction and make strategies. But investors conflict with that and want to move it differently. The clash between founders and investors leads to 13% of the startup's failure.

No viable business model

It’s a plan used to run a business that explains how the business generates revenue. It lists all the information about the products or services it sells.

Weak management

Ultimately the business success depends on how the team is managing it.

Get outcompeted

Competition is present everywhere in the business world. And for startups, it is another annoying hurdle that either gets them to success or shut them down.

Legal challenges

We all need to live and follow the rules and regulations (whether they’re national, religious, or societal). The same case is with business, which needs to be, operated within the legal boundaries.

Not pivoting

According to Forbes:

Not networking

For building relationships with investors, it is important to have a network with them. Most entrepreneurs make the mistake of not having enough networks and relationships with people to get funds. As a result, it becomes difficult for them to get financing when needed, and so 8% of the startups fail.

Lack of passion

While considering money, an entrepreneur needs a passion for their idea. The tragedy is some entrepreneurs have great ideas, do market research, generate funds for operations, but lose interest and passion for that idea.

Unfavorable pivoting

As I early mentioned pivoting helps you make your business adopt another business model in the hope of getting a fortune. Unlike Instagram and Groupon, where pivoting played a role in making them successful.

Losing attention

Startup businesses are hard to establish. They need full attention from the founder and its team. You need to do marketing while keeping an eye on the financial affairs and projects within the company. And after years of hard work and effort finally pays off.

Price/cost issues

Price and cost are the two pillars of a business model. A balance between price and cost helps your business to cover costs and grow faster.

Summary

Having an entrepreneurial spirit is good, but it is compulsory to pay attention to different factors that make a business successful.

  • Running out of cash
  • Lack of financing
  • Poor marketing
  • Team and investor conflict
  • No viable business model
  • Weak management
  • Get outcompete
  • Legal challenges
  • Not pivoting
  • Not networking
  • Lack of passion
  • Unfavorable pivoting
  • Losing attention
  • Price/cost issues

A writer & dreamer. I write about business, finance, and marketing. @AhmadAl82230443

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