The Main Reasons Why Most Startups Fail


You have probably heard many dreadful stories about failure, which with a vengeance are genuinely disturbing and easily make every entrepreneur instinctively flinch. Even some of the most successful entrepreneurs of our times once have hit the bottom – Bill Gates watched his first company fall apart, Arianna Huffington was rejected by 36 publishers, Steve Jobs was fired from his own company. Shockingly even Walt Disney has been told that he lacks creativity!

There are many reasons, which can lead to the failure of a startup, and here you will find five of them. The important thing is to remember that failure is inevitable part of success and the secret of success is to learn how to let go and keep moving forward.

Great idea, bad execution

Failing to create an action plan and a strong execution strategy is one of the main reasons why entrepreneurs with great ideas fail to turn those ideas into actual products or businesses. Ideas by themselves do not make a big difference in the world if they are not materialized and profitably executed.

Running out of cash

Many entrepreneurs forget that money is finite after they receive their first check from an investor. Poor money management and the inability to judiciously allocate the cash always lead to bad results and unfortunate outcomes for a starting company.

Weak team

One of the most important components of a promising startup according to the majority of VCs and angel investors is the strong team. If the team is not highly-skilled, motivated, committed and cohesive, the startup will undoubtedly fail. Some founders just can’t get along and let their discrepancies interfere with their work. The lack of leadership skills of the founders and their poor hiring skills are often the reasons behind the forming of an unsuccessful startup team.

Loosing focus

Discipline and focus are essential driving powers for all entrepreneurs. When the founders lose their direction and forget their main vision and mission, the failure is inevitable. Pivoting is fruitful only when it is done right. Bad and miscalculated pivoting can be disastrous!

Get outcompeted

If an investor asks you about your competition and you say that you have no competition, you are never going to get an investment for your company. The lack of competition may mean two things: the business has no potential, no market validation (no demand – no supply) or you simply don’t know anything about the market you are going to enter. Obsessing about the competition is never advisable, but ignoring them is even worst. Many entrepreneurs underestimate their competition or fail to outrun them, which are big enough reasons that lead to failure.

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