Top 5 reasons why startups fail

Top 5 reasons why startups fail

Start-ups these days are mushrooming like never before, all thanks to the new digital era. But more than 50% of them collapse even before achieving their dreams. Why does this happen? Is it something to do with their inability to produce quality service or something else?

“There’s the general economy, and then we each have our own personal economy. The general economy is definitely suffering. MY economy is great.”
– T. Harv Eker (Author, Businessman, Motivational Speaker)

It all depends on your timing of taking crucial business decisions. Imagine what would have been the fate of Amazon Prime if it released seven years back. Is that all it takes to run a start-up successfully? No, there is more to it. Good entrepreneurs are those who learn the lessons from others’ failures and apply those lessons to come out of obstacles with flying colours.

Let’s have a look at some key reasons for most start-up failures.

Lack of gritty workforce and unique business model

One of the primary reasons behind the downfall of a start-up is lack of innovation. 77% of venture capitalists have surveyed and discovered that most of the start-ups lack new technologies and unique business models. In a study by conducted by IBM Institute for Business with Oxford economics, lack of innovation has been marked as a cause for the downfall of most start-ups. Most failed start-ups are lack proper technology and teams which work together. There is also a lack of thinking along different lines which brings loss to the company. Moreover, their present is a sheer lack of skilled and sincere workforce that leads the company to a breakdown. However, the solution to such a problem is to hire a skilled workforce and advanced technology to build up the company in a precise manner. Also, team members should never be afraid of trying something new because change is the only constant. Diversity is needed for progression.

Poor Team Management

Most of the start-up companies crumble down because of poor team management. The fact is already to our knowledge that success is teamwork. But most office environments don’t have that. Poor team management is an incredibly common problem in almost every start-up.

A weak management team is likely to commit mistakes in some specific areas:

  • They fail to brainstorm a strong strategy together – a product developed indeed lacks uniqueness than it could have if brainstormed otherwise. It results from not doing enough work to validate the ideas before and during the development. However, this can easily be solved by mutual coordination, planning, and discussion.
  • Poor execution leads to failure as well. It happens when management hires key personnel randomly without proper credibility analysis. It could be solved by working on hiring procedures and screening candidates as per their management skills instead of on-paper work experience.
Lack of purpose

Every act must and should have a significant meaning attached to it; otherwise, you will find it to be boring after a certain period of time. A worker may find it easy to work overtime if his purpose lies at creating extra income to support his child’s education. You may find study awful, but if you love the smile on your parents face and your academic success can make that happen, you will find study more soul-satisfying than anything else.

Lack of Clarity of goals

“If you know what you want, you will find a way to get it”
– Jim Rohn (American Entrepreneur, Author and Motivational Speaker)

The statement is applicable to all aspiring entrepreneurs in our topic of discussion. Because most of them start on the right foot but lose directions after a couple of setbacks. It goes something like this – they start with a strong motivation to earn fame, then on their way in the journey start to face obstacles, lose their patience and finally give up. This will not happen if they will have clarity of thoughts in their mind.

Poor Marketing

Unless your product has zero competitors to it, which is highly unlike under any circumstances, you’re going to need strong marketing efforts to attract prospects. However, most fail to understand what marketing means. It is not about making more and more people aware of your product; instead, it is about infusing more and more value for the prospects in order to make it highly likable in the market.

There is another part to it. Entrepreneurs think they only become ready for marketing when their product gets ready to be launched in the market. Wrong! They must begin much early, like releasing whitepapers about product description on official websites or creating buzz on social media about their upcoming product. By doing so, they would create an early base for their product in the market. Also, any feedback in advance will help them to make necessary changes to their product while it is under development.


To quote Charlie Munger, “All I want to know is where I am going to die so I will never go there.” Undeniably, there is immense competition. But we live in times of collaboration, not competition. Collaborate, give value to others, learn from others and grow together. Have a mastermind group where you help each other and celebrate their successes as if it were your own. Work on your inner game because your business is only a reflection of your inner world.

Rhea Punjabi

Rhea Punjabi

I'm an Image & Self-Enhancement Coach. I help individuals detoxify from within and reflect their beautiful versions on the outside. Mission: Help 1,00,000 individuals lead a life of confidence, purpose, and abundance.

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