Most Common Failure Of Most Startups?
We see startups failing with their main business idea in just the first few years and after a period of 5-10 years, we see only a handful of startups still being in the race and going forward with their business idea. There is not a single reason why startups fail, there are several factors that contribute to the failure of a startup and prevent it from becoming successful. So what are the common factors or reasons behind the failure of most startups? Let’s find out:
Lack Of Market Demand
Lack of market demand is the first reason why most startups go out of business in just a few years. If there is no market demand then there will be no cash inflow. Most companies go out of business because they plan their product or service without considering the demands and trends of the market.
Most of the time, startups try to introduce such a product or feature into the market for which the market wasn’t mature enough and the customers weren’t aware of due to which such startups fail to achieve their objectives. These startups are able to raise the capital that they need to launch their product such as Word Unscrambler but they completely overestimate the market or the market isn’t ready for that product due to which they have to face failure. The correct interpretation of the market is very important and it can save a startup from failure before it even begins its operations.
Lack Of Financial Resources
Another important reason that contributes to the failure of most startups is the lack of financial resources. In the initial phases, startups are able to gather funding but in growth phases, where follow-up financing is very important, they are unable to generate sufficient financial resources to keep their startup running.
We see most startups running on the funding of an investor, company, or crowdfunding. If a startup doesn’t have enough finances then at the end of the day it is going to go out of business because no matter how futuristic or innovative a product a startup is building, if it doesn’t have proper funding and financial resources then it won’t be able to withstand long in the market.
Wrong Team
Another big reason why most startups fail is that these startups are unable to gather the right team for the job. If there is a wrong team assembled for a startup then that startup isn’t going to work. For a startup to achieve its goals, there must be a proper team assembled in which there is cooperation among team members, otherwise, the startup doesn’t stand a chance in the market.
Assembling a team is very important for the success of a startup and product, even if it is a product like Scrabble Word Finder. What’s even more important are the initial employees of the startup. The first employees of any startup are very important and they can make or break up a start. Having the right team assembled and having the right persons for the right job will get the job done but if there is a lack of technical and management people in the startup then know that such a startup isn’t going to last long.
Imbalance Between Pricing & Costs
An imbalance between pricing and costs can also contribute to the failure of a startup. Usually, entrepreneurs miscalculate the cost and pricing for their products and end up calculating such a price for their product that is either too low to have a profitable business model or too high that customers aren’t able to afford it.
Pricing and costs should be balanced so that a startup is not only able to make a profit but only attract customers with affordable prices. Any imbalance and we can see the startup going out of business because little profit or few customers aren’t going to help the startup in the long run.
Strong Competition
Startups also fail because they are forced to give up by their competitors. While coming up with an idea, entrepreneurs don’t really take competition into perspective and they are focused only to bring their idea into reality. They usually end up in such a competitive market where their competitors are strong and have the resources and finances, unlike new startups which are then forced to give up.
If it weren’t for strong competition then we would see most startups being able to achieve their goals and thriving in the market but since the market has become too fierce and competitive nowadays, it is very difficult to stay in the market unless someone has got a huge amount of resources.
