The reasons for startup failure

Most business books focus on success stories. Otherwise, they wouldn’t have sold so well. But survivorship bias sometimes paints a picture that is too good to be true. What if, instead of success stories, we studied failure stories? In the frenzy of excitement, it’s easy to forget that in reality, the majority of startups crash within the first three years of their creation. The dream fades, reality hits. The smartest thing an entrepreneur can do is to study exactly why startups fail, identify a problem and think about how to avoid it. It all comes down to two main reasons: marketing and team.

-Lack of proper marketing research:

The majority of product and customer issues, such as an unfriendly product, poor product timing, competition, pricing issues, etc. are the result of market research that was not done properly. Including the most common startup problem that affects 42% of founders – lack of market need.

Too often, founders rely solely on their own vision and the opinions of friends and family, or/and don’t pay enough attention to the realities of the existing market. The importance of market research cannot be ignored. Otherwise, it can lead to an inability to meet the needs of the market and a high failure rate.

How to avoid

Product-market fit requires a product that people have to pay for and are used to paying for in order to solve a problem. The work of creating a new business should start with a long research phase, ideally long before you think about the details of the product itself. Try setting up a landing page promoting early access to your product, get traffic and measure engagement.

-Poor marketing

At the same time, it’s common for even products that fit the market to not be marketed properly. Either companies are selling their products in a way that doesn’t appeal to the audience, or they don’t understand what people really want and try to highlight the wrong features. You can have the best product in the world, but if no one knows about it and it’s not attractive, it won’t sell. Captivated by their product, many startup founders tend to neglect marketing efforts.

How to avoid

The most important thing to realize is that no matter what business you’re in, you’re still in the marketing business. The sooner you understand this, the more likely you are to succeed.


Wrong team

Sometimes, no matter how expert a team member is, they are not right for that particular project. Startups need people who have startup experience. They may also be missing a quality that is critical to the success of the project. As the project progresses, the situation becomes more complicated.

How to avoid

The best way is to hire experienced professionals to cover all areas of your business. For tech startups, there is another option. You can consider hiring an outside custom software development company with valuable experience in building startups.

Disagreement within the team

For seed stage companies with multiple founders, it’s often the team dynamics that kill them. The pressure of working in a startup can be too much for some relationships. Founders need to maintain quality communication with each other to avoid bickering and misunderstandings.

How to avoid

Two words: team alignment.

Remember to work with your team. Make sure everyone understands what it is all about. Most team members will change over time and that’s okay, whether they decide to leave on their own or are let go for various reasons. Just make sure that the new members understand and accept the main goals of your company.

-Burn out

Even if a project has survived for several years, founders can face the insidious problem of burn out, when, after years of hard work, people feel they no longer have the same amount of energy or creativity.

How to avoid it

The solution may be to hire other talented and creative people and manage work-life balance, although this can be difficult when working in a startup.

-Lack of passion

Boredom sets in. The ideal is replaced by the reality.

This problem mainly occurs when an entrepreneur does not know what his motivation is and why he created a company.

How to avoid it

To get through the crisis successfully, you need to understand clearly why you are doing what you are doing: to get rich, to create a business and sell it, to change the world and leave a mark. Determine the real reason that motivates you. But remember, even if you are considering selling it, you can only sell a business that is doing well.

In conclusion, all of this may seem clear. In reality, of course, it is not. There are many reasons why startups fail, but it seems that it all comes down to marketing and the team. Failure doesn’t happen by accident. It starts with ignorance, which can be corrected.

In the future, startups will continue to lead innovation. While some of the statistics may not seem encouraging, with careful planning and a lot of determination, it is possible to create a product that will change the world and make your dreams a reality.


Add comment: