5 Major Reasons Why Startups Fail

Why Businesses Fail

Why Businesses Fail

As known to many of you, that about a month ago we had initiated our quest to explore the reasons behind a startups’ downfall.

Since then over the course of last month i.e From March 24th 2016 to April 24th 2016 we have been relentlessly examining and surveying startups to dig out the actual evident reasons that take down a startup.

Also Read: Why Startups Fail?

After examining and surveying around 150 startups, we discovered 5 major reasons that bring down a startup.

Continue reading to discover what they are.

Reason 1: Electing Wrong Business To Start With

When examining, we discovered that approximately 93% of the startups that failed or were about or were not just doing as expected had one major reason in common.

Wrong choice it is. During our process we observed that many startups that stalled, stalled because of the same reason. They elected a business for themselves which was not suited to them at any cost and at any instance. They just elected it for the reason that, some of their competitors were doing excellently good in those identical business domains. You need to closely analyse and evaluate if what you think will work for you will certainly work for you or not. And this can only be done when you do a ground and have stats to support your decisions.

Reason 2: Poor Competitor Analysis

Never forget there are people who started even before you did. They have grasped some firm market grip till now and it won’t be an easy road for you to snatch the market.

During our survey we discovered that 77.3% startups that failed had fallen prey to poor competitor analysis. Some said that the reason behind conducting a poor competitor analysis was being too engrossed in their ideas and also a certain quantity of overconfidence.

Reason 3: Lack Of Technology

Technology by far is the most important element of any business that we have examined during our tenure of conducting survey. Every business that we surveyed and approached accepted that tech is what drives their business at anticipated pace.

65% of stalled startups had this in common. They either leveraged inappropriate technology for their business or they don’t do it at all. Which is why it is advised to analyse and leverage the right technology for startup so as to boom.

Reason 4: Improper Marketing Strategy

Every business needs marketing and it needs to done the right way every time. Many business fall as they never get the anticipated output from their marketing. To execute marketing  the right way, you need to consider numerous aspects of it.

Of all the startups that we examined, 73.7% of the startups stalled because of improper marketing. Marketing if not done properly breaks every vertebrae in your business’ spin.

Reason 5:  Eagerness To Scale

The numbers are small but they deliver a very strong message. only 8% of the failed startups had failed because of this reason. The only mistake that they committed was, they never really had their turf under their control, but instead were looking forward to scale at a very exponential speed. Understanding and creating a firm base is even more crucial than scaling up. Although it a bit late but still a lot of startups have their learning and now are looking forward to avoid it in near future.
Summing up, these are top 5 reasons which bring down a startup. Beware of these as they can be on your back too.