Why do startups fail?

30 Nov 2015

For every startup that succeeds, there are many that fail. Building a successful startup is not an easy task. It is too big a question to be answered in one article, as various factors that are only specific to a particular situation could have contributed to failure. As you startup, take a look at these common causes of startup failure.


Building a Product no one Wants

Building a product without actually testing the product-market fit for it is a bad idea. You have to work towards building something that solves a major pain point for your customers. You should be able to identify and cater to the needs of the market.

 The Right Team

Trying to build the next big thing without having the right people working with you will not be fruitful in the long run. Hire brilliant people, but make sure they are as committed to your vision as you are and ensure you can work together.

 Lack of Passion and Stamina

You need to have the drive to see your idea right from inception to launch. If the startup founder does not have a strong passion for the business, and the stamina to sustain through its growth, they will burn out and not be able to persist through the bad times, which is a given in any startup, and quite frequent. Bad times will challenge you, and your failure to react positively will lead to startup failure.

 Failure to Pivot

You should know when to pivot, and you should do it before you run out of funds. You should also know whether to pivot or not. If you fail to change direction when your business is not getting results, it leads to a waste of time, money, and resources. Even though you started out building something different altogether, changing direction to build something based on your acquired knowledge is difficult but can save your startup.

 No Mentors or Advisors

You need the right people to guide you at every stage of your growth. Take everyone’s advice with a pinch of salt but make sure you have all the information that is possible to have before you make a decision.

 Timing is Everything

Launching your startup at the right time is crucial. Launch too soon, and you might fail because the market is not ready for such an idea. Wait too long too launch, and someone else might already startup while the market is hot.

 No Business Plan

Make sure you have a plan on how you are going to scale and build your business. Have the metrics in place on how you are going to utilize funds. Create a sound business plan with year on year projection of growth that investors can trust.

 Running out of Funds

Startups that run out of resources also usually do so because the founders don’t want to give up a piece of the pie, the budgets were not planned properly, the burn rate was too high, or it just took longer to raise funding than initially expected.

 Unplanned Growth

Many startups start to scale without first perfecting their product. When you’ve built a business model that works only up to a certain size, your model can’t sustain growth. Sometimes you must change your model fast. The founders who are not flexible, and who don’t think ahead, will not be able to scale their business at all.


Know who your competition is and devise a strategy as to how you aim to be different and provide more value to your customers. Work on how you are going to maintain a competitive advantage. According to Peter Thiel, ask yourself what you’re doing that no one else is doing. Or if someone is not doing it well enough, what are you doing differently to win the market?

 Your Pricing Model

How is your business priced? Is it too high or too low? Listen to what customers are saying. Do they think the price doesn’t justify the features?

 Is your Product User Friendly?

Assume nothing about customers. Make informed decisions armed with market research. Just because it’s a great idea to you on paper, will not mean it will translate to great startup in reality.

 Marketing Fail

No matter how great a product, it is meaningless if your potential target market does not know about it. Know how to capture the attention of your customers and keep it.

 Listen to Customers

It is very important to get feedback from customers and iterate accordingly if you want to remain viable. Without optimizing the data you get from your customers, it’s not possible to create a viable product in high demand.



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