Startup failure is as common as creating a startup. As an entrepreneur, you definitely read business magazines and go to business specialist bookstores right? What do you get to read there? 

Let me guess!! Business success stories with the road to follow to turn a simple idea into an outstanding venture? But hope you also know that every day a handful of startups crash with more or less of a bang. 

Most entrepreneurs think they are creating the next big revolution in their respective industries. However, in reality, 90% of them fail. Starting a business is a lot tougher than most people assume. With minimal effort, rarely is a business so in tune with its niche. Now that’s an exception. But why do you think so many businesses fail?

The reasons run deep, but here are seven common reasons for startup failure that you should consider before starting your own business.

  • Lack of market demand – One of the main reasons for business failure

Startups fail when they do not solve an existing market problem and find solutions to customers’ needs. Most companies believe that their product/service is quite appealing and the company will face a downfall when the product fails to create demand and solve customer needs.

  • Lack of funds – A very common problem leading to startup closures

Startups need sufficient capital to operate smoothly. Many startups fail due to insufficient funds as one doesn’t know how much to spend on the business. 

Startup failure rate is almost the same across all industries with 70% of the startups failing between two-five years of the business.

  • Not the right team – Can affect almost anything involving teamwork

A team with various skillsets is very crucial for a startup to take off. Both the founder and the team should focus on industries related to their skills and academic background. Disharmony in the team might not help the business take off, let alone be successful. A good team will not only save a startup failure but also anything and vice versa. 

  • Product mistimed – Needs careful estimation

If your product is out in the market too early, customers may assume it is not good enough, and getting them back may be difficult as the first impression is the last impression. And if vice versa, you may have missed your window of opportunity in the market.

  • Expensive pricing – Needs deep research

The pricing of the product is a very sensitive factor. If a product is priced too much, then the product might fail to attract and bring in customers to make it successful. Customers do not complain about the product’s pricing when there is a benefit.

  • Flawed business model – Something all entrepreneurs should give more importance to 

Many times, entrepreneurs believe that it is easy to build a product, service, or website and acquire customers. However, it is not too easy to achieve without an effective business model. A business model focuses on figuring out a scalable way to acquire customers and monetize customers.

  • Marketing Issues – Another leading cause of startup failure

For a startup, it is all about getting the attention of customers and converting them into leads. And to do that marketing is the most important skill of a successful business. If the entrepreneur fails to market the product properly, then the business might not take off as assumed.

There are other reasons for a startup to fail including lack of passion, failure to pivot, cash burnout, not using the proper network, no investors on board, legal challenges, etc.

Conclusion 

Starting a business is never easy. Apparently, 11 out of 12 startups fail. But you can be one of the 10% that succeed in the first year. To do this, you need to consider the obstacles outlined above. Hard work, drive, and absolute determination can make up for gaps in skills and experience. The rest is learned by implementing, making mistakes, and adapting along the journey.

Remember: Entrepreneurs are made, not born.