Startups are considered the new face of business and technology.The number of Startups is growing at a huge rate in recent years, as the culture of owning a company is becoming more and more popular.Although we see some huge Startup success stories the number of startup failure is larger by a fair margin.
So,why do startups fail? that’s the first question we ask.If we consider it there could be countless reasons for startup failure.Though the most basic one is that startups are mostly started by young,aspiring entrepreneurs who have some or none experience in business and marketing.
Let’s see 5 most common reasons why startups fail.
1.No Market Need
The major reason for startups seen in recent years is that entrepreneurs are too optimistic about acquiring customers.Assuming that building an interesting product,website or service will be enough to attract customers is the first mistake.The product-market fit is considered as a major problem by numerous-entrepreneurs. There usually might be too little or no market for the product.
To tackle this problem you need to have a proper business model in place and build a product fitting to the market need.
2.Running out of Money
The 2nd major reason cited by many startup founders is running out of money. Simply because it’s been months since founding your company doesn’t mean that it is now worth more money.The key is to set a certain milestones and achieving them before the cash runs out.Most startups fail to do this and end up running out of money.
Though it is still possible for some to raise money the valuation becomes much lower and as a result trying to find a suitable investor much more difficult.
3.NOT the Right team
An incredibly common problem in startups is to find the right team.A startup needs to have the right balance as well as diversity in it’steam.People with a number of skills are required to build a successful startup. And just having the right set of people isn’t going to be the solution to all your problems you also have to find a way to make them work in one cohesive unit.
4.Lost to Competition
Numerous startups are started everyday and in such a scenario having a number of companies with the same idea or product is inevitable.Many startups fail to thrive in this competition.Most of the founders have a feeling that they are launching the best product in the market.Although optimism is good,you should not in any condition turn a blind eye towards your competition.
Consumer markets today have various needs A number of startups compete to get the attention of people.In such a case pricing the product is always a major issue.Pricing it on the lower side can result in considerable losses whereas the opposite could result in customers not accepting the product.
Entrepreneurs should consider all the aspects of the market in order to ensure that they build a Successful startup.