Why 90% Startups Fail? | Top 6 Reasons For Startup Failure

August 28, 2019

5 min read

Here are the 6 most common reasons which lead to the failure of a startup and why 90% of startups fail.

shivi

Shivi Gupta

Consultant, Gurgaon

TIPS BUSINESS ENTREPRENEURSHIP
Why 90% Startups Fail? | Top 6 Reasons For Startup Failure

 

 

Every entrepreneur thinks that their business idea is going to be a wonder and become a unicorn startup in no time! The reality, however, is dark and, almost 90% of startups fail due to reasons which could have been prevented with proper guidance and support. Ideas turn into a business, and the business is hoped to turn into a success, but most startups are unable to live up to the entrepreneur's dream. 

While studying the failure stories of hundreds of stories, SeekWiser’s experts found specific common reasons which lead to the failure of a startup. With our guide, we aim to educate startups and help them avoid committing the same mistakes. Here are the six most common reasons which turn a startup’s dream into a nightmare:

Scattered Focus

During the early stages of business, entrepreneurs need to handle multiple operations to kickstart their business- incorporation, funds, recruiting, marketing and advertising, networking, and developing the right product or service. Amidst these activities, entrepreneurs give divided attention to all these areas, without accomplishing anything substantial. Focussing on one thing at a time or getting advice on these different business operations from their subject-matter business consultants can help entrepreneurs multi-manage these activities more efficiently. 

Not Focussing On Target Audience

Having a brilliant idea is one thing, but putting it across for the customers to reach it is another. When businesses solely focus on developing a product or service without paying attention to their target market and what the consumers want, it paves the way for a startup disaster. More than 40% of startups fail because they don’t crack the demand-supply code for their product or service and provide something to the customers which solve their needs. The only solution to this problem is to combine the efforts in developing the product or service and finding what the customers demand in the market. By improving the startup’s product as per the market needs and opening themselves to customer feedback, entrepreneurs can open the doors to a success story.

Not Having A Strong Startup Team Structure

A startup needs balance, not only in its operations but also in the startup team working behind the scenes. An imbalanced startup team structure would develop a weak strategy and lack the impactful implementation required. Poor execution of the right strategy is also one of the by-products of having a weak startup team. Weak managers and leaders also create a weak team, and this leads to the startup crumbling under the slowly built-up pressure due to lack of efficiency and productivity. 

ALSO READ: How To Create The Best Startup Team Structure 

Prematurely Scaling The Business

Getting too much, too soon is the wrong strategy. When a startup does not measure the pace at which it is growing and scale-up rapidly, it misses out on the journey that is required to be completed for steady and long-term startup growth. Premature scaling would include not acquiring customers before expanding the product or services; raising funding too early and spending it too quickly; the business model is eating up too much time and resources. When any of these symptoms are visible in the startup, the right thing to do is to pass the baton to a business management consultant and let them steer the business in the right director till the entrepreneur becomes familiar with the problem and solution.

Getting Stuck In Legal Issues

There are various times when a start encounters legal conundrums- right from the business incorporation, to drafting and vetting of contracts, from statutory compliances to litigation. When startups are not careful in handling their legal affairs carefully, they end up attracting unwanted legal trouble from not only the authorities but also their vendors, employees and clients. Startups need to handle their matters carefully and consult a competent legal advisor or startup lawyer to maintain good startup health. 

Not Leveraging Their Network

The most prominent mistake startups commit is not benefitting from the network of experts and startup mentors available at their disposal. Finding the right business consultants can open vast avenues for the business to new opportunities, potential clients, business connections and also more domain-expert consultants.

SeekWiser solves this issue by connecting startups with the right startup consultants in India and linking them to a worldwide network of professionals who can provide the needed guidance and support to avoid or deal with the issues mentioned above. SeekWiser’s business consultants can ensure that your startup does not end up adding to this ‘90%’ figure and help you in accelerating your startup’s growth hassle-free. Call our startup consultants and get the answers you need to make your business the next success story! Call SeekWiser's consultants at +91-7827886239 or send us an email at support@seekwiser.com