Why startups fail? roundup featured

Why Startups Fail? How to prevent a failure?

According to the bureau of labor statistics about 56% of all businesses that started in 2014 are dead in 2018. Only 44% of businesses are active at their forth year mark.

As Neil Patel pointed out 90% of startups fail (Forbes link). Startups are exciting, we wouldn’t have got facebook, google or uber if someone didn’t take the risk to spend their time energy and money to make something new.

Most of the successful startup founders got rewarded for taking this risk. But what about those startups that never see the daylight?

What did they do that prevented them from becoming a successful founder, producing a successful business?

I wanted to find that out, so I asked 100’s of business owners/experts this question:  “Why Startups Fail? How to prevent a failure?” and here is their answer.

To help you guys save your time I have summarized the causes of startup failure in the following chart.

Histogram of why startups fail

If you want to learn more feel free to jump to the expert’s opinion using the table of content below.

Table of Content

#1 Cause of Startup Failure – No Market for the Product

The primary reason of starting a business is to make money.

If the product you are selling has no buyer you will not make any money and even if you spend a fortune you will not be able to make it a profitable one.

You should check whether your product/service has any market demand before spending money or time.

It is known as “Product-market-fit”.

There are lots of ways you can check whether your product has any buyer.

Some of them do not even need any money.

Here are the experts who pointed out product-market fit as the key weakness that leads to failure for a startup.

Jonathan Aufray – CEO at Growth Hackers
Harris Schachter – Owner of OptimizePrime
Adam White – Founder at SEOJet
Matt Press – Director of Splash Copywriters
Brenda S. Stoltz – Chief Strategist: Ariadpartners.com
Suzette Mariel – High Performance Coach
Kim Garst- Social Media Influencer at KimGarst
Dave Schneider – CEO at Shortlist
Rishabh Dev – Director at Mapplinks
Irina Maltseva – Growth Marketer at Platformly
Andrew McCauley – Marketer at TheSocialMediaBloke
Kristian Banniste – Head of Marketing at BrightLocal
Anil Agarwal – SEO & Blogging Expert
Christian Lee – Affiliate Marketing Expert at 3hundrd.com 

#2 Cause of Startup Failure – Poor Human Resource

Business is grown by the people who work for it.

If your team members are motivated, has energy and skill-set to carry out the tasks assigned to them you can get away without hiring more people.

But if your team is not motivated, do not understand what needs to be done or not competent enough to do their job you are bound to see a failure.

There are tons of things that can go wrong with your human resource.

You can hire the wrong people, pay higher or lower than the expected range, fail to delegate the tasks, fail to establish communication, fail to deal your team with empathy etc.

Here are the experts who pointed out poor human resources as one of the key weakness that leads to failure for a startup.

John Hall – Co-founder and President Calendar
Nadya Khoja – Chief Growth Officer at Venngage
Jill Schiefelbein – Business Communication Expert
Douglas Karr – CEO, DK New Media
Sean Si – CEO and Founder of SEO Hacker
Nikola Baldikov – Digital Marketing Manager at Brosix
Nahid Hasan – CEO Bizcope
Kim Garst – Social Media Influencer at KimGarst

#3 Cause of Startup Failure – Poor Money Management

Just like real-life personal spending you have to have a balance between your earning/funding and spending.

If you do not manage your cash flow you may get into trouble.

It is very much possible that what you are spending is necessary but are underfunded. There could be some other scenarios too, for example:

Undocumented spending:
You need to document every penny you are spending and keep your book up-to-date.

It is easier to spend for an unnecessary reason when you do not know exactly what you are spending in which category.

Too much Buffer between payments:
Some times the customers delay their payments which is completely norman you just need to be prepared for this by provisioning some funds for this scenario.
It depends on the niche and the product, if you are a SaaS product provider you may not have this issue however if you are selling in the brick and mortar stores and rely on a third-party dealership then you got to be prepared for this.

Overspending on marketing or salary:
Sometimes it is essential to invest in certain marketing channels or hiring a few new talents to keep up with the growth but this will bite a chunk on your fund.

Not raising enough money:
You run out of money before reaching the next milestone probably because you have underestimated your cost and raised lower than necessary funding.

To avoid this take expert advice to plan your expense, secure funding for 12-16 months at lease, Start for funds before running out of money.

expert opinions pointed out Poor money management as one of the key weakness that leads to failure for a startup.

Bill Sebald – Owner at greenlanemarketing.com
Philip Varghese – Content Marketer Philipscom
Leonard Kim – Entrepreneur, Brand Marketer at LeonardKim.com
Daniel Daines-Hutt – Marketing Nerd at ampmycontent.com
Douglas Karr – CEO, DK New Media
Kim Garst – Social Media Influencer at KimGarst
Hugh_Beaulac – Digital Marketing Expert at MC2 blog

#4 Cause of Startup Failure – Poor Marketing

When you bring in a product/service to the market you need to know how to sell it.

A lot of startups focus on the startup journey (creating MVP, raising funds, meetings, checklists etc) rather than focusing on what will help them sell their product and earn money.

You can not treat marketing/sales your second priority.

It doesn’t matter how perfect your product is, how much money you have raised if your marketing does not match your overall startup growth you are in trouble.

expert opinions pointed out Poor marketing is one of the key weakness that leads to failure for a startup.

Christian Lee – Affiliate Marketing Expert at 3hundrd.com 
Jeff Baele – Marketing Strategist at mrmarketology.com
Evgeniy Garkaviy – Online Marketing Strategist at hopespring.org.uk
Matt Press – Director of Splash Copywriters
Douglas Karr – CEO, DK New Media

#5 Cause of Startup Failure – Lack of User Focus

A huge number of startups chase investors but they do not chase their customers.
They know the investors but they do not know their customers.

What our experts recommend is

Caring for the clients:
Caring for the first clients and try to over-deliver so that they can become your brand ambassadors.

Building relationships:
You need to build a relationship with your customers, understand who they are and what they need.

Gather feedbacks:
Collect timely feedback and act upon those feedbacks.

If you manage to get honest opinions from your customers often time you will understand that what you are offering is not enough or perhaps it is something entirely different your client wants.

This deeper understanding often becomes a major pivot point and a matter of success or failure.

Expert opinions pointed out Lack of user focus as one of the key weakness that leads to failure for a startup.

Scott Eddy – TV host Videoglobetrotter.com
Manuel Mas Candela – Digital Marketing Manager at Pavigym.com
Roy Povarchik – Founder at Stardom.IO
Jonathan Aufray – CEO at growth-hackers.net
Suzette Mariel – High Performance Coach

#6 Cause of Startup Failure – Poor business model

Before achieving anything you need to plan properly.

For such an intricate thing as a startup, this is even more true.

When you are doing thousands of things at the same time it is very easy to lose sight and start doing something that should not be your immediate priority.

It is your business model and plan which will help you focus on the things that matter the most.

Expert opinions pointed out Poor business model as one of the key weakness that leads to failure for a startup.

Mathias Ahlgren – Online Marketer at YoungDigitalLab.com
Ryan Amen – Director of Client Success at NiftyLaw
Michael Ferrari – Online Marketing Consultant at pencapseo.com
Rishabh Dev – Director at Mapplinks
Harris Schachter – Owner of OptimizePrime

#7 Cause of Startup Failure – Lack of/no investments

Running a business costs money, it doesn’t matter from where it is coming.

You will need enough of it to pay for the necessary bills.

Money is a great motivator, if you do not pay your staff enough or if you have to cut their salary you will ultimately demotivate your team and diminishing their output.

To prevent that you need to secure proper investments or use lean methodology to cut costs.

Expert opinions pointed out Lack of/no investments as one of the key weakness that leads to failure for a startup.

Joel Libava – The Franchise King at Thefranchiseking.com
Raelyn Tan – Mastermind Group @ raelyntan.com
Jamie Turner – CEO of 60SecondMarketer

#8 Cause of Startup Failure – Lack of Product Focus

Every startup starts because it solved one problem.

There may be a variety of ways to solve that problem but while doing so if you lose your sight from solving the problem and focus on something else you are no longer your former self.

If you really want to be successful you need to keep your core focus intact.

This will help you from wasting time and resources.

You can pivot of-course but there is a difference between pivoting and losing your focus from your core product.

expert opinions pointed out Lack of Product Focus as one of the key weakness that leads to failure for a startup.

Adam Chronister – SEO Strategist at Enleaf.com
Chris Makara – Digital Strategist at Chrismakara.com
Emenike Emmanuel – Digital Marketing Consultant at EntrepreneurBusinessblog.com
Nadav Dakner – CEO of InboundJunction
Steven Macdonald – Digital Marketer at Autoclipping.com

#9 Cause of Startup Failure -Bad Timing

Every thing has its time. If you bring a product before the right time it will not sell, if you bring a product after the optimum time your product will not sell. There are products that may sell even after an apocalyptic event but those are highly competitive area and chances are your product is not one of them.
As Predrag pointed out, there are many visionary founders who are way ahead of their time selling a product that market still doesn’t understand.
If you have an idea you can not be lazy and wait a few years to start the startup and then waste another few to bring it to the market.

Here are the influencer opinions pointing out bad timing as one of the reasons of startup failure

Predrag Lesic – CEO doMEn d.o.o.
Temi Odurinde – Founder Hope Spring
Douglas Karr – CEO, DK New Media

#11 Cause of Startup Failure – Lack of/no Market Research

Before starting spending tons of money to produce your MVP you need to complete your preliminary market research.
Once your MVP is ready you can gather more data and run a more elaborate market research however you can not run your business without doing your market research.

Irina Maltseva – Growth Marketer at Platformly
John Rampton – CEO of Calendar

#10 Cause of Startup Failure – Failure to Meet the Competition

This should be part of your market research. Before launching a product you need to understand the competition.
If the sector is already over saturated with competition you got to be ready for it.
It is safe to not enter into a competitive market without any major innovation.

Here are the influencer option on this matter:

David Leonhardt – President at Seo-Writer
Kim Garst – Social Media Influencer at KimGarst

#12 Cause of Startup Failure – Poor/no Mentorship

Ben Wynkoop – SEO Specialist at benwynkoop.com
Suzette Mariel – High Performance Coach
Lars Koudal – Owner at Larsik Corp

#13 Cause of Startup Failure – No Long Term Goal

Ankush Kohli – Digital Marketer at emarketinguide.com
Dr. Kay Green – CEO of EDesignConsult

#14 Cause of Startup Failure – Lack of Passion

Ryan Biddulph pointed out that lack of passion also could be a reason for the failure of your startup.

#15 Cause of Startup Failure – Failure to Pivot

Manuel Mas Candela pointed out that failure to pivot can also be a reason for failure. Oftentimes even a well established company goes bankrupt because they failed to pivot or waited too long to pivot to the right angle.

#8 Cause of Startup Failure – Failure to Scale

Business needs growth, opportunities comes in disguise you need to recognize it and act before the time is up. Failure to grow and scale is an important reason why your startup may fail as pointed out by Jitendra Vaswani.

There are few other reasons came up, Poor management, and burn out are few worth mentioning.

I have enlisted all the expert opinions one by one please feel free to leave your comment about any of the reasons/tips mentioned in this roundup post.

***** Experts are not presented in any particular order *****


Expert one line

Jonathan Aufray

Jonathan Aufray
Co-founder and CEO at Growth Hackers

There are so many reasons startups fail. The most important ones being:
– Making a product nobody wants
Not gathering feedback or Gathering feedback but not acting on it
– Focus on the product and not on the users
– Chasing investors instead of chasing customers

The best way to solve these mistakes is by taking a lean startup approach where creating an MVP or prototype and launching fast is crucial in order to gather feedback and data.

Then, by analyzing those, we can optimize the product as well as the marketing channels in order to make the product more user-centric.

The idea is to always test, tweak and iterate. Startup founders should spend 50% of the time and money on the product and 50% on growth.

Expert two line

Harris Schachter

Harris Schachter 
Owner of OptimizePrime, LLC.

Most startups fail because of one of two reasons.

The first is terrible management on the business side. It takes the right kind of leader to build a viable business among inevitable turbulent times.

The second is a failure to create a product people actually want.

Otherwise known as product-market fit, this is the process of validating your idea (which after all, starts off as just a hunch) with data.

You can’t start a business without making sure there will be customers to buy what you’re selling.

Sometimes, companies start with one idea and pivot to another once they realize their initial idea isn’t as profitable as another.

It is a crucial skill of a startup to run with their idea, validate it with data, and be willing and able to pivot when necessary.

Otherwise, you’ll risk failure.

Expert three line

Adam White

Adam White
Founder at SEOJet

One of the biggest reasons startups don’t make it is because they never establish proper product-market fit.

Someone comes up with a good idea and just assumes everyone will want to use it.

It is extremely important that any new startup solves a problem in your industry that your target audience will be willing to pay for.

For example, when I was doing SEO for clients I was always guessing at which anchor text to use and hated that there wasn’t software that would tell me what anchor text to use for every link to build out a #1 ranked backlink profile.

So I put my nose to the grindstone and figured out what Google actually wanted to see in a backlink profile and then created SEOJet around that.

Because it was such a big problem for me I knew it would be a big problem for thousands of other SEO’s out there.

Expert four line

Matt Press

Matt Press
Founder, owner and Director of Splash Copywriters

Most businesses fail because of 2 simple reasons.

Either the company in question is offering a product or service that no one wants or it’s not communicating the value of what they’re selling.

For instance, let’s take entrepreneur A. This person develops an app that tells you which Game Of Thrones character you most resemble. It’s a popular TV show and the advertising revenue has potential, so it seems like a good idea. However, in reality, he or she has no idea whether it would work (and certainly no idea whether people would pay for it).

Meanwhile, consider entrepreneur B. This person wants to start a cake business. Now, most people like cakes so the demand is there. However, competition is tough, the margins are small and to succeed, they need to differentiate themselves. Are there cakes gluten-free? Are they luxury cakes? Do they use a secret recipe? You get the picture.

Both are fatal. Meanwhile, the best brands do both. It’s what we’re trying to do with a start-up driving school that specializes in intensive driving courses (https://www.learnthinkdrive.com/intensive-driving-courses).

In the UK, most learners take over a year to pass their test so an option to learn how to drive inside a week is very appealing. The demand is there.

However, not many people realize that this option also saves them money too (we’ve done the maths).

So we have a job to convey all the pros. If we do, we’ll be successful. If we don’t, we’ll either blend into mediocrity or failure.

Expert five lineBrenda Stoltz

Brenda S. Stoltz
Founder & Chief Strategist: Ariadpartners.com

Why startups fail? How to prevent failure?

There are a number of reasons why start-ups fail, but I’m going to focus on two that I see quite often.

You have a great idea.

You KNOW that it will be a hit.

Maybe you, or a client of yours, had a problem and your solution will fix it.

So far, so good. But, don’t get cracking on the code yet.

Stop and clearly identify your market and then validate the need.

Don’t stop at “do you have this problem” or even “would you buy this tool to solve this problem.” Go deeper. Ask, “would you pay X.XX to solve this problem.” Why or why not?

You need to make sure you have a market large enough to sustain a business that not only has a need but also will pay you enough to address it.

Venture Capital (VC) funding comes to those who can already show momentum (meaning you have sales and are growing).

And even at that, very few start-ups actually get funded.

If you plan is to seek funding, assume you won’t get it and have a backup plan for organic growth.

The first “friend and family” of funding maybe all you raise.

Often, money and time runs out before you get to where you need to be.

Make sure you have a plan B to fund your growth.

Expert seven line

Suzette Mariel

Suzette Mariel
High Performance Coach

Start-ups can be risky, but also rewarding when you know what to avoid and what to work toward.

As a Certified High-Performance Coach specializing in business development and a business owner of 25 years, I have observed that most businesses fail due to one or more of the following 5 issues.

1. They do not have a product that fulfills a true need in the market place in which they are entering.
2. They fail due to a lack of competence in business operational skills.
3. They lack proper funding due to an inadequately proposed budget.
4. They fail due to communication problems within their business partnership around workflow, finances and division of labor.
5. Last but not least most businesses fail because of lack of continued interest or follow-through around their idea.

Preventing business failure is not a full-proof science, but there are a few key areas to pay attention to.

My business success has been attributed to properly assessing, researching and fulfilling a need that customers can use easily and understand how it helps them achieve their goals.

My second key to success is having the right business partner and support staff where each member is clear on their role within the company and feels recognized and appreciated for the value they bring to the company that actually makes a real impact on client satisfaction.

My last key to success is knowing business metrics.

Your business numbers concerning client acquisition, project budgets, taxes, financial reports and more can help you determine where you are and how to work to get where you need to be.

Being an entrepreneur is all about balancing the risk to capture the reward.

Expert Seven line

Kim Garst

Kim Garst
Forbes Top 10 Social Media Influencer: KimGarst

We’ve all heard the harrowing statistic that 50% of startups fail within their first two years. If you’re starting a business, this is a terrifying prospect!

But don’t worry: Identifying the most common causes of startup failures will help you plan and prepare, and hopefully avoid the most common startup mistakes.

Following are the four most common causes of failure among startups, in my opinion.

1. No market need

This is the #1 reason startups fail – in fact, a whopping 42% of new businesses fail for this reason!
Another way of putting it is this: these businesses didn’t identify their audience’s primary pain point…and didn’t create a product or service to solve that problem.
To avoid this, I strongly recommend doing market research before you even start creating your product. Ask questions, do surveys, do competitive analysis, and then test your MVP (minimum viable product) before you invest tons of time and money into fully creating it.

2. Running out of cash

I’m guessing this one doesn’t surprise you!
29% of startups run out of cash and need to shut their doors prematurely. This can be due to poor money management, lack of cash flow, inability to raise funds, or expanding too quickly.
To avoid this, create a budget early on and stick to it! As funds come in, earmark it immediately so it doesn’t fall through the cracks. Finally, run cash flow projections month to month so you don’t suddenly find yourself closing your doors simply because you can’t pay your electric bill!

3. Wrong team

23% of businesses fail because their team doesn’t have the skills, knowledge or drive to make things work.
To avoid this, identify your own weaknesses early on and surround yourself with people who can fill those gaps.
This could mean bringing on additional founding members, or it could mean hiring a team of freelancers. Either way, make sure you build a team that can actually deliver on your promises!

4. Getting outcompeted

Startups that aren’t keenly aware of what the competition is doing are often doomed for failure. In fact, this is the reason nearly one out of every five startups fail.

Before you launch, make sure you do a complete analysis of the competition: to see who else is working in this space, what products or services they offer, where they situate themselves in the market (price-wise), and most importantly – how you can differentiate yourself.

Expert eight lineDave Schneider

Dave Schneider
CEO at Shortlist

There’s a nice graph about this here: bit.ly/2lY01t2 that discusses the top twenty reasons startups fail.

Number one is no market need.

Basically most people just pursue ideas that no one wants.

Although that doesn’t necessarily mean that the idea is bad – but maybe they aren’t able to price it at a way that satisfies both sides of the market.

Or perhaps it was just the wrong time in history (too early, too late).

It’s also very difficult to validate a startup idea.

Ideally you can try to get 10 or so people to pay you money (even if it’s not what you intended to charge later on) to indicate at least some willingness to pay and work your way up from there.

Expert number nine lineRishabh Dev

Rishabh Dev
Director at Mapplinks

Having worked with over 150 startups in the past 10 years, I can see the 3rd biggest reason for startup failure after

#1 Building a product or service no one wants and

#2 Not having a business model or user persona in place.

Startups are spending way too many $ paid acquisition methods than their CAC/LTV value permits them.

Let me explain: CAC is the Cost of Acquiring a customer and LTV is their Lifetime Value.

Startups need to make sure their CAC stays as low as possible when compared to the user’s LTV.

This where growth marketing methods come in handy.

This is also why I focused my latest book on alternative marketing hacks.

Expert number ten lineIrina Maltseva

Irina Maltseva
Growth Marketer at Platformly

The reason why a lot of startups fail is that they fail to develop a product that meets the market need.

The typical situation is when a founder gets an idea, builds a solution without the proper market research, tries to sell it, then runs out of money, and, finally, startup dies.

When I joined my first startup, we faced the same problem.

The founder had a brilliant idea; everyone in the team was so excited to build the product.

We were building it for more than a year: perfect design, dozens of features, the app was working without any bugs.

When the day X has come, we released it on all popular startups platforms, got a couple of publications in international media, on TV… but we didn’t get app downloads — almost any.

Our marker was just not interested in the product we’ve spent a lot of time and money.

The thing that we forgot to do was the most important – market research.

The brilliant startup idea is not a success.

Success is to achieve the product/market fit.

To avoid such challenges, startups should work on customer development.

It means that they need to talk to potential customers as much as they can to move things forward and try to solve their problems.

There is no need to build a product for a couple of years and make it absolutely perfect.

Build a quick prototype, release it, and then develop the next version according to user feedback.


Expert number eleven lineAndrew McCauley

Andrew McCauley
Marketer TheSocialMediaBloke

I have been lucky enough to coach literally thousands of business owners over the last 10 years, all through various stages of their business life, from startups to companies that have been running for a long time, very successfully.

And usually by now I can quickly tell whether a business is going to succeed or not.

And I think one of the biggest failures that I see over and over and over again without fail is the fact that they do not look to see if what they’ve created, the product or the service that they’re offering is actually needed in the marketplace.

Many times these businesses will have a great idea and it may be a really good idea, but the fact is that nobody else is actually in need of that idea.

It’s nice to have an idea, but it’s not an idea that needs or solves a problem.

So, many businesses will go in full tilt, using lots of their money, lots of investors, money to create a product that doesn’t serve anybody with a real need.

And I think that’s the biggest problem with most of these businesses today, is that they’re coming out with an idea that they’re in love with, they’re emotionally connected to but the reality is that no one else is.

The second biggest factor that I see with startups is that they’re not keeping an eye on their money.

They don’t see where their money’s coming and going.

They take their eyes off the prize as far as the money goes.

They don’t know if they’re making more money than they’re spending every month.

They neglect it because a lot of people hate numbers.

They don’t like looking at it.

They rely on an accountant to look at it.

But if you do not have a grip on what you’re seeing and what’s coming in and what’s going out of your bank account on an almost daily basis, you’re going to find yourself with a very nasty surprise at the end of a month.

So you want to make sure that you are looking at what you’re spending, keeping a track of it, and making sure that there’s more money at the end of the month than a month.

Expert number twelve lineKristian Bannister

Kristian Bannister
Head of Marketing at BrightLocal

Failure to meet a market need is still what plagues many startups.

Your first goal is to convince someone that you’re tackling a problem that’s worth solving and paying for.

If you can find ten people like that, then there’s a good chance there are hundreds of more people out there with the same problem.

To understand the market need you must talk to your early customers as much as possible.

If you don’t have customers yet, then talk to who you think your ideal customer is.

Obsessing over metrics can come later, right now you need to be obsessing over your customers.

This goes far beyond getting customer feedback.

You should be trying to understand as much of your customer’s world as possible because the chances are you’re only ever going to make up a small slice of it.

Conduct video interviews, or better yet, pay them a visit.

Be willing to share what you are working on to get early feedback on whether it’s meeting a market need.

Talking to customers will also help you iterate intelligently, rather than trying to build the perfect product in isolation.

Share prototypes with customers and ask if you can observe them while they try it.

As businesses grow, the opportunity for founders to talk to customers diminishes — after all, you’ve got a bigger business to run.

So while startup life may seem like a grind, you’ll likely never have a better opportunity to talk to customers and let them help define your overall vision and strategy.

Embrace it.

Expert number thirteen lineAnil Agarwal

Anil Agarwal
SEO & Blogging Expert

Although there are a ton of reasons for most startups to fail but I think “trying to build a product or service where there’s no market need” is the #1 reason for failure of startups.

That being said, if you want to prevent failure, you can consider implementing the following ideas.

1. Hire the RIGHT team:

If you want to succeed, you need to get assistance from the right people.

You need to focus on building the right people.

Make sure to think long term while hiring someone as it yields the best results.

2. NEVER ignore customers:

Apple is now a trillion-dollar company.

It succeeded because it always focused on pleasing their “core customers” and target audience.

Above all, most startups fail because of poor marketing.

So hire someone or a team to market your startup the smart way.

Use whatever the strategy you can including influencer marketing to social media ads to SEO to promote your startup to reach out to more people.

Expert number 14 lineChristian Lee

Christian Lee
Affiliate Marketing Expert: 3hundrd.com

From my experiences, most startups fail because of two reasons;

They create a product that the market doesn’t need (which is a huge waste of time, energy and money which could be fatal for many startups), and

The next big reasons is;

They do not know how to sell their product..

You can have the best product/service in the world, but if you do not know how to market that product and actually sell it to the people that need it, you’re in for a tough ride and the only way you can be successful is if you get lucky, which by default – lucky is not something that happens often.

Expert number 15 line

John Hall
Co-founder and President Calendar.com

 

The biggest reason I see startup fail are not focusing on building a core team of amazing people.

Too many time later founders have egos and feel like they can do everything themselves when it’s the people that make and build a company.

If you spend time surrounding yourself with an amazing team you can overcome most challenges ahead of you.

Expert number 16 line

Ronald van den Hoff
CEO Seats2meet.com

Why we think startup fails?

Because they lack in starting collaborations.

Collaborations are key to success.

Many startups want to build, create, everything themselves instead of checking out what’s already out there.

This not only costs lots of money, but also takes your focus away from your actual core business why you started your business.

What we think you need is:

Connections, collaborations and growth and to break out of your bubble now and then, like we call them happy accidents (=serendipity moments).

Tools like the S2M Passport help with this.

The S2M Passport matches users to real-time relevant locations, professionals, events, and content that help them with their focus of the day.

This helps startups a lot by finding the right places to work, meet and professionals to connect with and get them out of their bubble.

Expert number 17 lineScott Eddy

Scott Eddy
TV host Video Globetrotter

Startups tend to concentrate on building the infrastructure, then the audience, rather than doing both at the same time.

They don’t really feel the importance of building an audience that early, I feel it’s a critical mistake.

Having an audience grow with you, seeing the growth, builds a deeper relationship, and that comes back to you ten-fold.

They need to allocate a portion of the startup capital to their marketing, hiring someone full-time (because they usually don’t have time or knowledge to do it themselves), make that just as important as any other part of the business.

Expert number 18 lineRyan Biddulph

Ryan Biddulph 
Amazon Best Selling Author Blogger

Startups fail because entrepreneurs obsess over outcomes like money, metrics and business growth and leave their passion and love of business building behind.

All successful ventures take off because founders are passionate, generous and focused on rendering some service to humanity.

Avoid failure.

Build a business because you love helping people in that niche.

Expert number 19 lineMathias Ahlgren

Mathias Ahlgren
First-hand experience in startups: Blogger

Why startups fail? How to prevent failure?

There are of course a number of reasons why a startup fails, but the one reason I want to highlight is the importance of having a business plan.

Not having a business plan is a sure way to fail, or as Benjamin Franklin put it, “If you fail to plan, you plan to fail”.

I think many startups think a business plan is just a way to raise funds.

But it’s more than that.

Writing out a business plan (and it doesn’t have to be overly complex or 100 pages long), actually forces you to review everything about your startup all at once.

For example it forces you to review what your startup’s vision/goal is, what your value proposition (problem are you solving) is, who your customers are, and how will you market to them, and what your financial (how will your startup make money as well as pay for stuff) is.

A business plan also serves as a motivational guide, something to look at and reflect on when going gets tough, so in a way having a business plan can also help prevent your startup from failing, as it can help your startup to get back on track.

Expert number 20 lineNadav Dakner

Nadav Dakner
Founder & CEO of InboundJunction

I think many startups fail because they don’t know how to scale in a healthy way, or their mindset is too keen on a big exit.

Pursuing a one billion company is not always the answer, it depends on the niche, the timing and the competition.

More startups need to think about profitability rather than raising more capital and keep scaling as fast as possible without thinking of how they turn ROI positive.

Again, in some cases the right strategy is scaling as fast as possible, but I’d advise thinking about steady growth and scaling, minimal funding and breaking into profitability mindset rather than 100 million exit or go home.

Expert number 21 line

Steven Macdonald

Steven Macdonald
Digital Marketer 

In my experience, startups fail because they lose sight of the original vision and the problem they were intent on solving.

Yes, there are exceptions – your product may need to evolve or pressure from investors means changing your initial approach – but often, it’s the founder looking to move too fast and grow and expand on the core product too quickly, rather than focusing to the original concept.

Execute on the original idea first, then evolve/ expand. Not at the same time.

Expert number 22 lineBen Wynkoop

Ben Wynkoop
SEO specialist

There are many reasons why startups fail, some of which are not fully in an entrepreneur’s control due to market forces, but there are reasons I see most often which are within complete, regardless of the industry: 1.) Mentorship and 2.) Tenacity.

Mentorship
Many people try to “reinvent the wheel” often someone exists who has already gone down your path and proven the recipe needed for success and is offering this blueprint via a course and/or consulting.

Choosing not to  follow the beaten path with startups is no different than studying to be a chef but insisting to develop every recipe yourself versus saving time, money, and opportunity from trial and error by learning from a “Master Chef.”

Tenacity
The correct mentorship/recipe, there is major reason possess the confidence for tenacity when facing adversity in entrepreneurship because it’s rational to believe (using another chef analogy) that it is only a matter of time before you begin producing consistent “batches” (results), provided you grind through struggles, stay consistent, and move fast, when a majority of aspiring entrepreneurs are not willing to endure the uphill journey that may involve working during a weekend in lieu of going to Coachella.

While this may sound harsh, it’s the truth; you’re destined to find success sooner or later if you stay consistent while moving as fast as possible, implementing a proven recipe when other’s quit.

Yes, you must know when to quit, but a big factor in this decision is being aware that you are on the right path (testing all proven methods).

Expert number 23 lineBill Sebald

Bill Sebald
Owner greenlanemarketing.com

In my personal experience, when I see startups fail, it’s because of a misalignment of actual funds needed.

If you are in a business that can afford to grow on its own earnings, where your capital is only your own time, that’s wonderful.

But if you have competition, and need a more aggressive entrance, you have to go in with marketing and advertising dollars.

Bootstrapping is a wonderful concept, but there’s a limit to how much stretching you can do before everything breaks down.

Bootstrap with the proper budget; the gamble starts with a good hand and the courage to start the flywheel with a good monetary bet.

Expert number 24 lineJeet Banerjee

Jeet Banerjee
Serial Entrepreneur, Founder theincomeincubator.com

One of the top reasons why I have seen startups fail is because they run out of money.

Balancing your finances early as a startup is extremely important to your long-term success.

Most new companies want to create the best possible version of their product without adequate proof of concept causing them to overspend.

The way to prevent this failure is to build a minimum viable product (MVP).

The most fundamental and core version of your product just so you can prove the concept.

This will help your startup stay bootstrapped and cashflow positive longer!

Expert number 25 lineJoel Libava

Joel Libava
The Franchise King

Startup business fail for lots of reasons.

The usual ones include lack of capital, poor market research and unrealistic break-even times.

But there’s one thing entrepreneurs can do to increase their odds of making it through the always-tough 1st year in business.

In short, the one thing that needs to be done: aggressive marketing. And that requires money.

That said, my idea of aggressive marketing is to double your original marketing/advertising budget.

That’s because your potential clients/customers are inundated with marketing messages from the moment they wake up to the time they fall asleep.

You must stay top of mind if you’re going to have any chance of success with your new venture. And that takes money.

Expert number 26 lineMark Asquith

Mark Asquith
CEO & co-founder RebelBaseMedia

When startups fail it’s often due to a lack of focus on the actual user and stubbornness in not being quick enough to adapt and even pivot when the market dictates it.

So many great products never quite find their user-base, and it’s down to the founder(s) to understand what those users want and to give it to them, not to fall in love with their product so much that it harms the development of it.

Expert number 27 lineJitendra Vaswani

Jitendra Vaswani
Digital Marketing Speaker Author: BloggersIdeas

Starting a new company or building a product is an easy part, sustaining operations or making them grow is the biggest challenge so far I have seen in the startup industry.

Maintain your calm, invest wisely in your team and go step by step.

As a leader, you need to enhance your leadership skills and focus on personal development. Keep building your acumen and never stop learning. ”

You have to keep your technology and software updated. Many big fortune 500 companies ran out of business because they didn’t adapt to new technology.

Just because the market is volatile and 80% startups shut down every year, you need to envisage the future and focus on profitability and viability in the long run.

Expert number 28 lineManuel Mas Candela

Manuel Mas Candela
Digital Marketing Manager : Pavigym

IMHO, some startups fail because they aren’t focused on the product and the client, and are more worried thinking about their next finance round.

Startup success is a long way and it doesn’t occur at the very beginnings.

Also, some startups have no capacity to pivot when things are going wrong, because of team adaptation to changes or the stubbornness of their founders.

The way to success is to think about a good product and care for it, also care for your first clients and of course, listen to them to learn what they need.

Expert number 29 lineAnna Bennett

Anna Bennett
Pinterest marketing strategist

42% of startups fail, mostly because they ignore the opportunity to capitalize on a niche and don’t actually provide a solution to an explicit problem explains Graham, a Texas-based entrepreneur and investor.

That means almost half of all startup ideas are worthless.

Do you even know what a niche is? If you don’t you’re going to waste a lot of time, money, and effort in your business.

If you continue down the path of being a generalist, meaning “being everything to everybody” you might as well throw in the towel and forget about being on an entrepreneur altogether.

I kid you not.

When I am coaching Pinterest managers one of the most frequently asked questions I hear is: why is it so hard to prospect and close new business.

The first question I ask them is “who is your target audience”?

Often they’ll say small businesses, or bloggers, or some will say “everybody, I just want to get a client”.

When I tell them they need to narrow their market it feels limiting and frightening to them.

If they can’t make a sale now how will they ever close business by marketing to fewer people?

Yikes!

What many people don’t realize is that the more laser-focused you are on a niche, the easier it is to succeed.

By homing in on a niche you can be unique and stand out within your industry.

Bottom line; being a generalist will lead you down the path of; frustration, worry, and ultimately put you out of business.

 

Here are three good reasons why choosing a niche is vital to your business:

1. It helps build trust

When you understand your client’s business it resonates with them and that helps build trust. Customers can feel your authenticity and industry knowledge and that results in a bond.

2. Customers trust you more

When you have a specialty you will have more confidence than being a generalist because you will be able to meet the needs of your customer better.

3. Helps you stand out from the competition.

When people reach out to me for Pinterest management services they are required to fill out a questionnaire so that I can identify how I can them stand out from the millions of businesses on Pinterest.

From my seven years of experience managing Pinterest accounts, those who intimately know how their products differ from their competition are the ones that do amazing well.

You make more money in the long run with a niche because you’ll be targeting a more specific group rather than one with mass appeal.

Choosing a niche shouldn’t feel like a daunting task.

Choosing a niche is a well-tested strategy to stand apart in a sea of generalists.

Being a generalist means that you have potentially thousands of competitors, all thinking big and vying for the same market, same customers, and same piece of the pie as you.

When you do this you risk seeing your success rate drop especially if all your competitors offer the same services you do and market themselves in a similar way.

Expert number 30 lineRaelyn Tan

Raelyn Tan
Mastermind Group @ raelyntan

Startups usually fail when they run out of cash before they are able to monetize successfully.

Hence, I recommend following the Lean Start-up methodology by Eric Ries, where you come up with a minimum viable product to test the market before spending huge amounts of money on employees, development, and more.

By shortening the product development cycle and focusing on creating something that the market actually wants, it helps you to quickly achieve success as you are focusing on actually selling something and quickly bringing cash in.

Expert number 31 lineLeonard Kim

Leonard Kim
Entrepreneur, Brand Marketer

Startups fail for a multitude of reasons and it’s not always due to incoming revenue.

Most would assume that a startup would fail because not enough money is coming in.

However, after working at multiple companies that went bankrupt simultaneously, I can state that this is definitely not the case.

One startup I worked at, we got revenues up to $50,000 a month by maybe the sixth month of existence. You’d think the company would do well and everyone would be on their happy way, but no.

Company funds were mishandled and too much money was invested into payroll, so when a few internal pivots happened, the company collapsed and went under.

Another startup I worked with, our goal was to get vendors across California to accept our card, so we signed up 1,000.

Since not enough money was raised through angel investments to finance the success of acquiring customers, that startup tanked too.

A real estate fund I worked at went bankrupt when Bear Stearns went down in a fire sale and lending guidelines changed.

My boss at another investment fund, his portfolio and assets plummeted and he lost 90% of his money.

The same thing happened for most of the clients that he managed money for, so since cash dried up, the company failed.

A few side projects I worked on fell apart just because we either lost interest in continuing the pursue it or because we later found that the industry was just too hard to breakthrough.

The biggest problem that most people make is that they invest all their resources into branding and marketing the company.

When you invest everything straight into the company, you’re making a huge bet with a low opportunity for success, because of industry statistics on how many companies are bound for failure.

But what if there was a better way?

There is.

When you invest into your personal brand instead, and the personal brands of those who work either for or with you, you get to do all the things you intend to do with the business, but through yourself instead.

You are able to get to know, like and trust the people whom you communicate with, and they are able to get to know, like and trust you as well.

These people who you communicate with can then end up becoming followers who support you as a person, people who become clients to your services, potential business partners or employees and advocates who help share what you’re doing with others.

What that all ultimately leads to is a greater sense of success with your business, all without even investing in the marketing of it.

Instead, you get to focus on building up the most valuable assets that your company will have throughout the course of its entire existence, the people within it.

Because these are the people that your customers, investors and so forth are doing business with, not the actual product or service itself.

Plus, if you don’t have a business today and you decide to build your personal brand now, when you start your business later, you will already have a huge network of people who can help you propel your business further at a much earlier phase.

Don’t believe it works?

Look at the most successful people in the world.

Most of them are public figures who have invested heavily into building their personal brands.

And that’s why they’ve reaped massive success.

Invest into what works and save your startup from becoming just another failed statistic, keeping the average down.

Instead, go make a true connection with others, so people seek you and your business out.

Expert number 32 line

Jeff Beale

Jeff Beale
Marketing Strategist

Startup struggle in succeeding due to the focus being on what they offer versus what problems they solve and for who.

Many startups focus on telling you what they provide and why they are the best at what they provide over identifying who their ideal customers are, their needs and how they solve their problems.

If you can tell your prospects what’s in it for them, you become more attractive.

If you deliver what you promise you create loyal customers.

If you continue to maintain communication and the same quality of service or produce, you survive for years to come.

Expert number 33 lineRoy Povarchik

Roy Povarchik
Founder growth agency Stardom.IO

I think most startups fail for mostly 2 reasons:

1. They don’t take the time to understand their users and user’s needs well enough:

Almost every fast pace growing company I’ve worked with – always had these two in place.

They would do a lot of customer interviews, look at the customer support tickets, watch video sessions, looking at usage data – and basically spent a lot of time trying to better get what their users need from them and how they are currently using their product.

2. Lack of framework and processes.

I see a lot of companies try to do “”everything, all the time””.

The right way to work is to make sure you are doing the right thing, measuring that you’r getting the impact you want to get and if not, stop and move to the next thing.

Most companies just don’t prioritize and measure well enough.

Expert number 34 lineNadya Khoja

Nadya Khoja
Chief Growth Officer 

Why do startups fail?

I don’t think there is a specific answer to this question.

The list can go on and on, but if I think it often comes down to an ego problem at the top.

Big egos on a leadership team often lead to this belief that there is nothing left to learn.

As a result, I think what could happen is these leaders are not open to hearing from others on their team or being open to change.

I see this being something that often impacts the entire company and doesn’t come down to a specific tactic or decision being wrong.

Expert number 35 line

Predrag Lesic

Predrag Lesic
CEO doMEn d.o.o.

Many startups fail due to wrong timing.

There are these visionary founders and that drive ahead of time trying to “sell” a product/service that the market still doesn’t understand.

I’m using “doesn’t understand” before “doesn’t need” as there is a huge difference.

It is NOT obvious that there is a need except these by these visionary founders.

And then there are lazy founders, too slow in implementation.

They see an opportunity, they can smell the market and the money but they are too lazy in execution.

The result is usually the same – somebody else is faster in execution.

How to prevent the failure?

As a visionary founder, be patient and keep watching the market all the time, have a stable source of income for living (investments or other business) and never give up.

As a lazy founder, find someone who can get you into higher transmission gear.

Find someone who you can make you run faster.

Expert number 36 line
Daniel Daines-Hutt

Daniel Daines-Hutt
Self confessed marketing nerd

There’s a whole heap of reasons why startups can fail.

A major issue?

Not being self-sufficient

Too many startups rely on funding without focusing on sales processes

This means they can lose sight of what their audience really needs (if ppl don’t actually buy them it’s a major blind spot on providing what they need…)

Having a focus on an accurate sales process can make all the difference.

Expert number 37 line
Georgi Todorov

Georgi Todorov
Digital Marketer

I think that most startups fail because of 2 main reasons:

1) Lack of focus: They want to be everywhere.

To manage and have huge audience on Social networks, to develop a new product, to go to network on different events, to do SEO and they’re just 2 people… and at the end of the day they’re nowhere.
2) Also, I’ve seen so many startup enthusiasts who never walk the talk.

They spend all their time in meetings, drinking coffee and discussing their ideas but they never get to work.

Expert number 38 line

Marina Barayeva

Marina Barayeva
Marketing for Creatives Podcast Host

There can be many factors why startups fail, but here are a few common mistakes that people make:

1. Leaving a stable job too early.

Some folks start a business because they don’t like their job or want changes in life.

They picture a successful business in mind without realizing that it takes time to grow to the point where it brings consistent revenue.

Because of that, they get to the regular stress where to get money to pay bills and cover the debt.

Cover yourself with a regular income and focus on the growth until your business becomes profitable.

2. Expecting to have a successful business fast.

People try for some time, don’t see the results, fail, and quit. Everyone goes through this.

The question is, Are you going to let other people win?

Or you will get up and keep hustling?

There is no failure.

These are your expectations that haven’t been met, and it’s an experience you gain.

‘Fail’ and get up fast. The experience will get you closer to your goals.

3. Not paying attention to numbers and analytics.

It’s easy to get caught in the new marketing tactics, fill yourself with the work, and look like a busy entrepreneur.

Start your to-do list with 3 questions:
o Does this bring me money?
o Does this help me to achieve my goal(s)?
o What one thing can I do today that helps me make more money?

With this simple exercise, you’ll become more productive and effective in business.

Put more effort into what works and leave what doesn’t.

Expert number 39 line

Richard Hale

Richard Hale
Founder HaleWebDevelopment

I feel there are 4 main things that every startup needs to succeed and these 4 things apply to everyone.

Those are Mindset, Focus, Environment, and Failure. Let me explain.

Mindset: With the right mindset, anything is possible.

If you didn’t believe in yourself, you wouldn’t be where you are today.

One of the best things you can do to shape your mindset is finding mentors.

Ideally, you want to find mentors that are where you want to be (in life and business).

They’re well worth the investment.

Focus: As a startup, your focus has to be on point or you’ll find yourself spending time and effort on things that don’t matter.

If you’re not pushing the right buttons, you get yourself in trouble.

You end us wasting time, money and effort.

Most startups are cash strapped, so making sure you’re focusing on what moves the needle is a big key to your success.

Environment: I’ve seen this one empower entrepreneurs to do amazing things and it’s one of the best things you can do to ensure your own success.

You need to be around people that are like-minded as you, people that are on the same journey (although some can be far ahead of where you are).

Great things can happen when you have others to learn from, it can be a powerful asset for you.

Failure: Yes, the final core pillar is failure.

Just because you fail doing something doesn’t mean it’s “failure.”

Rather, it’s a learning opportunity.

You simply learned one way not to do something.

Don’t view failure as being negative, it’s far from it so as long as you’re learning from it.

Don’t repeat your mistakes.

While there are many things in the world that can lead to success or cause failure, I feel these 4 elements are vital to everyone’s success.

It doesn’t matter what niche or industry you’re in, these key ingredients will greatly influence your success or failure.

Expert number 40 lineJill Schiefelbein

Jill Schiefelbein
Business communication expert

Lack of open communication.

Start-up businesses can face a lot of turbulence when there is a lack of transparency and open communication.

This doesn’t mean communicate everything.

It does mean making sure you have processes in place so that people have access to all information that is relevant for them to do their jobs and be part of the growth.

As businesses grow some of these things fall through the cracks.

Make sure your communication infrastructure is set up to optimize information and knowledge sharing.

Expert number 41 line

Lars Koudal

Lars Koudal
Owner at Larsik Corp

Always listen to advice and suggestions, also and most important from people with whom you do not agree.

Then make up your mind and do it your way.

Your journey will not be the same for you as for everyone else.

Don’t follow someone else’s path and expect the same result.

Succeed or fail, at least you will have done it the way you wanted and hopefully learned something along the way you can use in the future.

Expert number 42 line

David Leonhardt

David Leonhardt
President at Seo-Writer

I and a partner failed at our start-up.

It was a great idea to enter an SaaS market where there were other players.

That meant it would be a challenge to get attention, but we had some improvements over the offerings at the time, so we felt we could enter and compete.

It turns out we couldn’t.

One reason was because we did not adequately articulate how our offering was better than the offerings already on the market.

But the real reason it failed went deeper.

Neither of us wanted to give up our day job.

Neither of us was able to devote 100% of our time to the startup, so our main focus was earning our income and running our current businesses.

There was nobody whose full-time job was to evangelize for our startup, and that’s why it failed.

Expert number 43 line

Douglas Karr

Douglas Karr
CEO, DK New Media

I’ve worked with well over a hundred startups and continue to see some common reasons why they fail. They include:

Timing

Some startups were premature and it would require too many resources to build momentum.

Some were too late and were drowned out by well-funded startups.

Team

I’m often surprised at the number of startups that hire enterprise resources.

While these resources are fantastic once a company is ramping up, they lack the agility and stamina that experienced startup talent has.

Sales

You simply can’t grow without an experienced sales team.

Too many startups think hiring young talent and getting them to dial for dollars is the key.

It’s not. As a startup, you lack the authority and track record.

By hiring an experienced sales team, you’re able to bring their relationships in… who will take the risk on your company because that sales leader helped them in the past.

Marketing

Without properly researching the market and speaking to the benefits that you’re bringing your customers, as well as appearing professionally and as a thought leader within your industry, getting prospects is going to be a problem.

Features and functionality don’t sell a startup… trust, momentum, word of mouth, testimonials, and relationships drive sales.

Without a comprehensive revenue team, you’re going to die.

Cashflow

I’ve watched crappy startups flourish and innovative startups die, all because their leadership couldn’t manage cashflow appropriately.

Cashflow is a house of cards, requiring the ability to scale, collect, and grow based on future revenues.

If you don’t, the cards will fall.

Expert number 44 line

Sean Si

Sean Si
CEO and Founder of SEO Hacker

Hiring people is one of the most critical things in startups and it can also be a probable cause of why they fail.

Startups can fail if you entrust it to the hands of people with self-serving interests.

If you are building a team, you definitely would want to work with the right people and steer clear of the wrong ones.

As a founder of a company and main leader, I make sure to plan a solid hiring process and strategies in place to make sure that my team is happy with who they are working with.

I believe in finding people with character, commitment, and skill, this is the most effective way to prevent failure.

Ultimately, I still beam in the accomplishment of giving my team members a job that they love.

My company has now been around for almost a decade and I can still say that whenever I see that the team is fulfilled in their work and environment, that’s when I know that we are headed to greater things.

Expert number 45 line

Adam Chronister

Adam Chronister
SEO Strategist & Speaker

We have been in businesses since 2009 and in that time, we have seen a fair share of companies in our space come and go.

Most of those that have failed did so because they lost sight of their core competencies.

When the business landscape gets tough, it’s tempting to pivot but, doing so often comes at a risk to the business and its reputation.

To stay ahead, you need to stand out amongst the competition, and this takes time as well as perseverance.

Most of the companies that survive and then later thrive, don’t just work in the business but also on the business itself.

They are always looking for ways to better what they do.

They make sure they are taking care of their customers but, also work to ensure their employees are content and their sales pipeline is full.

To us, these are the characteristics that separate the wheat from the chaff.

Expert number 46 line

Ryan Amen

Ryan Amen
Director of Client Success at NiftyLaw

One reason some startups fail before they can gain traction is due to a lack of planning.

To be more specific, the lack of planning & implementing a proper budget & expectations for marketing & promotion.

Many people get blinded by their own excitement about the goals of the business & products/services the business delivers.

Don’t get me wrong, this excitement can be a good driving force to help endure the roadblocks & setbacks of getting the business off the ground.

However, that excitement also needs to be coupled with a healthy budget & proper expectations for what it will really take to promote those products/services.

I’ve seen a lot of new business owners go into a new business with the “if I build it they will come” mentality & they often learn that if they don’t promote it after they build it, the customers don’t come.

Furthermore, I’ve even heard some marketers discuss how to apply the Pareto principle to creation & promotion of marketing materials which suggests that you should spend about 20% of your marketing budget producing creatives to market & the other 80% should go into promotion of those materials (can’t remember where I saw this so sorry for not properly attributing here).

It’s can be easy to lose sight of the potential impact which continuously creating marketing materials & promoting them can have until you start to see the rate of growth in revenue become greater than the creation/promotion costs but it usually takes some time for that to happen.

So just remember to reserve a solid budget for marketing, continually refine your efforts & the ROI will eventually come.

Expert number 47 line

Nikola Baldikov

Nikola Baldikov
Digital Marketing Manager at Brosix

A lack of people with the skills needed to win- this is one of the main reasons why startups fail.

This could happen due to a lack of resources to hire talent, but more often it’s a de-prioritization of finding the right talent for an organization in the first place.

Founders instead often try to do everything on their own, from design and sales to marketing and accounting and more, even when they have the opportunity to outsource much of this work to niche specialists.

This creates a situation where startup founders don’t have enough time to focus on the areas where they’re best equipped to add value.

Expert number 48 line

Devesh Sharma

Dev Sharma
Founder of WPKube

I think the disregard for self-care and burnout is one of the most overlooked causes of failure for many startups and entrepreneurs.

With today’s glorification of “the grind” culture, many entrepreneurs solely focus on overworking themselves to a point they end up getting burned out and abandoning their startups.

This is same for startups that push their employees beyond limits while making them work hard to reach impossible deadlines.

Most CEOs and entrepreneurs fail to grasp that productivity can’t be forced out of people.

A happy, more relaxed, and satisfied team is the key to productivity and to building a successful startup and sustained growth.

Expert number 49 line

Philip Verghese 'Ariel'

Philip Verghese ‘Ariel’
Content Marketer Philipscom

Why do startups fail? How to prevent failure?

Financial crunch is one of the major reasons for such failures.

Insufficient financial assistance really leads to disaster.

Though there will be an initial investment, poor planning in allocating funds and resources based upon the startup’s needs often leads to financial crunch.

Yet another failure I noticed is that the unity among the team members.

If you can’t find a like-minded personality as a co-founder or team member it will be a hell of a time.

In recent times I read an interview on Failory with David Beaton, the founder of Sharkius games a London based company revealed one of the major reasons for his failure.

He said: “Running a team has so much more complexities than a single-person project.

I made mistakes in people management, hiring too fast, firing too slow.

I made mistakes in project management, and on and on!

Yes, proper planning and allocation along with finding a proper team and working together are some of the basic things to prevent any failures.

Expert number 50 lineJamie Turner

Jamie Turner
CEO of 60SecondMarketer

Studies show that the #1 reason start-ups fail is because of cash flow.

In other words, they might have a good product or service, but if they can’t get paid from their own customers quickly enough, then they don’t have the funds on hand to support their staff.

When that happens, the staff walks and the start-up fails.

The solution is to either
1) run things in an extremely lean fashion so that cash flow is not a problem (which inhibits growth, by the way), or
2) use savings or funding from banks/backers/friends to supplement the cash flow.

Expert number 51 lineTony Restell

Tony Restell
Founder of Social-Hire.com

The single biggest factor I see determining whether a startup fails or not is if the Founder has prioritized giving the business time to succeed.

When you talk to successful Founders, you will frequently hear them say that their business today serves a different need – or serves that need in a different way – than what was envisaged when the business was started.

What this means in practice is that the startup needs longer than the business plan has envisaged to become sustainable.

Lots of startups fail because they simply haven’t factored in having time to adapt to what they learn from their first 6-12 months of being in a market.

Successful Founders will typically

i) plan up front that their business plan will take longer than anticipated to start generating a profit and / or

ii) quickly prioritize income generation from any source (not the income stream that the business is going to live off longer term) in order to simply survive the early months and give the business the chance to make it to longer-term profitability.

Expert number 52 line

Shounak Gupte

Shounak Gupte
Owner ShounakGupte

I’ve been working with small businesses and startups for the last 15+ years.

I’ve noticed the main reason for their failure is that most of the failed businesses start a business without having any value proposition for their business.

Nothing sets them apart from their competitors.

It is critical that every business owner needs to think their unique value proposition before they put time and money in starting a business.

Expert number 53 line

Chris Makara

Chris Makara
Digital Strategist

I think a lot of startups fail due to lack of focus.

For example, they might start with a goal they are working towards but easily lose focus of that goal as the business grows.

This lack of focus ultimately allows them to wander aimlessly off course of their initial goal.

In the end, they end up nowhere near where they need to be and ultimately fail.

Expert number 54 line

Nahid Hasan

Nahid Hasan
Founder and CEO, Bizcope

There are many reasons, and reasons will actually depend on the types of startups and the people behind it.

For example, when some new energetic people with no business / professional experience come up with an idea and build their startups they fail for not having enough managerial and data analysis experience.

And it’s common.

So we should not judge it as a failure, rather we better consider it as a journey.

A startup may fail so many times to find their winning team and strategies.

When they find it, they will need to scale it up.

While scaling up they can again fail for another reason, but again its a learning.

So to prevent it or reducing the failing percentage, we should always try to find what other successful people have done in a similar situation.

Because startups face similar kinds of issues.

Roughly, 80% of the issues could be the same for most of the businesses.

So we can learn the solution from experts who faced it earlier and found the solution.

And after the learning, we can implement it in our own startups but in a smarter way.

Expert number 55 line

Lorraine Reguly

Lorraine Reguly
Author, Teacher, Coach 

WHY STARTUPS FAIL

Startups often fail because people don’t realize how much work is involved in running a business.

A small portion of the responsibilities include:
– keeping accurate records
– buying goods or services
– hiring reliable, qualified people to help you succeed
– marketing
– blogging (and the many responsibilities that go along with the blogging process )
– website hosting and maintenance (there are always problems with plugins, server downtime, etc.)
– building an online following of loyal clients or customers
– working long hours, ensuring everything is running smoothly
– dealing with problems when they arise (which sets you back in your schedule!)
– affording the start-up costs
– finding time to live the rest of your life (with family and friends)
– and so much more!

HOW TO PREVENT FAILURE AND ENSURE SUCCESS

Things that startups can do to ensure their success include:
– having enough money beforehand to pay the bills, pay employees, hire assistants, etc.
– realizing that profits take a long time to make (most businesses don’t make a profit in their first year)
– finding people who are dedicated to helping you succeed
– carving out the time to work long hours during the first year
– being able to find a good work-life balance
– finding solutions to problems before they can arise (anticipating them and preventing them)
– beta-testing the need for what you are selling/offering
– making as much run via automation and using AI (Artificial Intelligence) to aid you
– and so much more!

Expert number 56 line

John Rampton

John Rampton
Co-Founder and CEO of Calendar

There can be any number of reasons why startups fail.

Most often, failure happens due to poor planning, research, and market/competitor knowledge.

The startup founder did not take time to study their target audience and determine if they were truly meeting that audience segment’s need/problem.

However, other issues can lead to failure, including burning through funding instead of implementing a lean budget.

A founder can also launch too quickly without ensuring the product/service works well.

Spend more time than you think you need on the front end of starting a business versus rushing.

That can go a long way toward avoiding failure.

Expert number 57 line

Dr. Kay Green

Dr. Kay Green
CEO of EDesignConsult

When startups fail, it is often because they do not think long-term.

A successful business launch does not guarantee a successful business.

Startups should take care to make five and ten-year goals.

They should also invest in things that will benefit their employees down the line, like ongoing training.

Expert number 58 line

Michael Ferrari

Michael Ferrari
Online Marketing Consultant

In my experience, most new businesses fail because they either don’t have a plan or don’t stick to the plan they have.

The first reason is a bit explanatory and easy enough to avoid, but the second is more difficult to realize until it’s too late.

I’ve seen several entrepreneurs go into business offering a specific service, in which they are an expert.

But starting a business can be scary and when things are slow business owners tend to freak out and take any kind of work they can get, even if it’s way outside of their scope of expertise.

This is where I see most businesses fall short, as working too far outside your scope leads to poor results that not only leave the client unsatisfied but also takes time away from more viable biz dev tasks.

This is why any time I talk with people starting up new ventures, I emphasize making sure you not only know exactly what your business can and will do, but also make sure you know what it can’t do as well.

That way you can stay on course and follow your initial plans to success!

Expert number 59 line
Ankush Kohli

Ankush Kohli
Digital Marketer emarketinguide.com

Causes of startup failures:

1. Not a unique idea: In most of time, duplicate ideas can’t survive in long run so better to start with a unique idea.
2. Your Idea is not satisfying customers need: If your product/service is not fulfilling your targeted customer needs then nobody would buy your product/service.
3. Not having Long term Goals: If your short term & long term goals are not clear then you’re not going anywhere.

And now ways to avoid:

1. Have a proper business plan and be flexible with it.
2. Decide your business cycle, goals, vision and mission.
3. Review and audit your plan time-to-time.

Expert number 60 line

Emenike Emmanuel

Emenike Emmanuel
Digital Marketing Consultant

Over the past 3 years of going full-time into online business and business coaching, I have come to realize that one the major reasons startups fail is because of LACK OF FOCUS.

There comes a time in your journey as an entrepreneur that you will be tempted to do too many things at the same time.

Some of such drives emanates from seeing a close friend who’s doing pretty well in his field and wanting to join him because of how simple his business model looks on the outside, unknown to you that all you see is not all there is in every business. This is called shiny object syndrome.

If you find yourself in such condition, resist it. Never yield to it.

Lack of focus has made so many startups to drift away from their core objectives.

Here’s the thing people who lack focus don’t know… Lack of focus can make you abandon your startup to another seemingly looking business when you are almost at the verge of your breakthrough.

To prevent lack of focus from limiting you, here’s what you should do…

Find a profitable business in the field of your passion and go ALL IN into it.

Stay on it until you are considered an expert before you can even think of adding another business to it.

Most importantly, expand within the same industry.

I’m certain this will work for you as much as it has worked for me, my students and some of the best businesses I’ve painstakingly taken time to study.

Expert number 61 line

Temi Odurinde

Temi Odurinde
Founder Hope Spring

There are many factors that could lead to the failure of a startup.

You may have all finance you need, the personnel and other resources and still fail, if you are too far ahead of your time.

An example to illustrate this potential pitfall, in a startup fashion retailer in the early days of .com boom.

I think they were called Boo.

In those days, broadband did not exist, the only form of internet access was dial-up.

If you try to buy or view a dress at Boo back then, you have to wait for a long time, for the pictures to load.

Sadly, internet users are not known for their patience, that startup ran out of money and went bankrupt.

Their concept was perfect, they were probably the first in that niche.

But the technology that could make people buy from them was not available for another 10 years or so.

The moral of the story is that, if your startup is at the cutting edge of your field, be ensured that the technologies you need to succeed is widely available.

Expert number 62 line

Debbie Clarke
Owner: Debbiedooodah.co.uk

I think a lot of start-ups fail because they don’t understand what is it their customers really want and need.

They end up talking about their product in the wrong way.

They don’t understand that people buy because of emotions.

So businesses can get all excited about the nuts and bolts of their product, but fail to recognize that we all buy things because of basic human needs.

The need to have status, to save time, to feel part of something, the list can go on.

Also, it generally takes a long time to build a reputation and establish your brand, and this might mean not being as successful as you’d like as quickly as you’d like.

And businesses can fold just when they are on the cusp of something good.

However failure is all part of it, and if your business fails to work out what you can learn from it, and if you’re brave enough to launch another business, you’ll take all that learning along with you!

Expert number 63 line

Owner - Cilderman Solutons, LLC

Matt Cilderman
Owner Cilderman Solutions

Startups Fail Due to Terrible Brand Strategy.

Why did you start the business?

Were you tired of working for your boss?

Hoping to make more money?

Looking for a more flexible schedule?

Be honest with yourself.

While these are not bad reasons to start, they are all selfish.

If you’re still not convinced, did you put your name in the title of the company?

( Don’t feel so bad…I did the same thing) Start-ups that thrive are customer-focused.

Brand strategy is essential because it helps you identify your company’s core values, then determine where they intersect with the needs of your customers.

In order to do that, you must actually know your customers and be passionate about helping them: what they need, what delights, or informs them.

It makes sure you are filling a need in the marketplace and not attempting to fill the black hole that is your ego!


Expert number 64 line

Owner at Rethink402, LLC

Brett Helling
Owner at Gigworker.com

Nine out of 10 startups fail. Ugly truth but true. (Fortune http://bit.ly/startup-failure1)

These cold statistics are not meant to discourage the future entrepreneurs, but intended to encourage them to stick to their passion and work smarter and harder.

Case study
The infamous Pat Flynn, from Smart Passive Income, teaches proven strategies before you waste your time and money.

His couple of startups failed and have a great advice to tell the newbies in business.

He set up a store on CafePress.com, a website where you can create unique t-shirts (among other things) and sell them for a profit.

All you have to do is come up with ideas that will sell.

His idea called ‘Brain Tees’ which was going to sell nerdy and geeky apparel, like T-shirts that say “I love pi” and stuff that made you think.

He designed a couple of t-shirts and started to “market” by showing family and friends my creations.

Result?
The startup had no sales after a month or so.

He was not feeling inspired to create more designs and he just let the domain and store expire.

Lesson
1. He learned that he enjoyed blogging and providing information online more so than e-commerce and retail.

2. PASSION + EXPERTISE are key components for successful startups.

3. Now he has his own famous online website called SPI (Smart Passive Income.com)

How to prevent failure?
1. Share Your Idea: The more you share your idea, the better that idea becomes.

Share it with friends, family, people in your mastermind group, people in your community and even complete strangers!

2. Competition is a good thing: Make a difference in your product.

This way, you have an advantage coming in later – not only knowing that there’s a market for that product – but also knowing what can be done better.

Therefore, give people want they want – yes – but give them a better version of what they are already getting.

3. Sell before you build: If you truly want to know whether or not a product will sell or not, you’ve got to get people to pull out their wallets and actually pay you for it.


Expert number 65 line

Syed Irfan Ajmal
Owner of a Marketing Agency

Common characteristics of startups that failed are:

1. Incompetence
2. Lack of experience in the line of goods
3. Little experience
4. Personal problems

Lack of knowledge and planning, little or no experience can lead to bad decisions.

Do you know a bad business model typically strikes a business before it scales?

About 64% of startups fail due to a bad business model. (https://www.failory.com/blog/startup-failure-rate)

And above all, not focusing on the “why” of your business and concentrating your efforts to increase profits or revenue.

These reasons lead startups to fail miserably.

You can prevent your startup to fail by first focusing on

• Why should the customer buy this?
• Why should they buy from me?
• Why should they buy at a particular time?

Know your ‘WHY’

Simon Sinek, a bestselling author, has developed what he calls the “Golden Circle.” which consists of

Why – This is the core belief of the business. It’s why the business exists.

When people believe in your ‘why’, they’re more than a lead or customer.

They’re an evangelist.

Expert number 66 lineSEO consultant

Evgeniy Garkaviy
Online marketing strategist

I think one of the most important reasons is lack of time and correct marketing planning.

Recently I have visited one startup conference and I can admit that every year this industry becomes more and more competitive.

But very big problem for the startup developers is promotion.

Even if the business model is very good but you do not invest money into promotion it means that other people are not aware of your startup.

If you read success stories of different startups you will find that marketing was one of the major success factors.

Usually it is not cheap and you need to find some investors.

Expert number 67 line

A Passionate #Blogger

Santanu Debnath
Founder: Bloggingjoy.com

It has become a trend to create a startup these days.

But the majority of the startups failed miserably and there are few basic reasons behind that.

Let me discuss a few of such reasons behind startup failures.

The most common reason is that the startup is not solving any problem users are facing.

There are many great ideas, but if the idea doesn’t have the potential to solve an existing problem then there is no hope for such startups.

The 2nd reason I believe is a proper team. Behind every successful business, you need a solid team of dedicated members with different skill-sets.

It is not always possible for a single person to run the show alone. You need a team of such hungry people who believe in sharing the same dream.

The 3rd reason is finance.

Even if you have a good problem-solving idea and a dedicated team but if you don’t have enough funding then your startup may fail in the womb itself.

Expert number 68 line

Evgen Schastnyy

Evgen Schastnyy
Marketing Specialist at Growthpros.io

There are various reasons why startups fail, but from my experience I see the main ones as follows:- Relaying to much on paid advertising.

This strategy is good on the early stage, when you have no traffic and nobody knows what you are doing.

But the more you pay for ads the higher is the price and less engages is the audience you are trying to target.

This leads to burning dollars as paper with low conversion rate, testing different ads and so on.

It’s better to decrease the influence of the paid ads on the overall success of the business when you are getting more traction with your audience.

Not delegating the routine tasks.

The truth is that the CEO/Founder can’t do everything.

Even though he/she may love to code/design/write/sale (underline the correct word) you need to pass these tasks and teach someone else to do them.

Otherwise, you’ll end up sitting in front of your computer in the middle of the night looking for the advices from the «Getting things done» book to find some time to sleep 🙂

Paying too much time and efforts to the MVP.

Test this before you invest too much.

Make a landing page with a description of you product, connect the payment gateway and pre-sell you thing.

Launch a Kick-starter campaign and see if people will buy.

If not – refund the money and pivot.

This will give you an understanding if you really need to invest your time and money into something.

Expert number 69 line

Hugh Beaulac

Hugh Beaulac
Digital Marketing Expert at MC2 blog

In 2019, more and more people want to start up their own business.

It seems to be a great idea to become an entrepreneur and therefore be in charge of your workflow and income.

However, the lack of financial literacy is one of the main problems why startups fail.

As 80% of entrepreneurs use their own money to fund their businesses, it’s crucial to know how to manage your finances the right way.

Thus, investing in financial assistance is a great way to avoid making poor financial choices, and therefore stay competitive on the market.

 

Conclusion:

There you have it. Some amazing insights on what are the key causes of startup failure and how to avoid it.

If you have any comments about any of the tips provided above please ,by all means, post it below..

Tarek Dinaji

Tarek Dinaji Inbound Marketing and Website SEO Acquisition Expert. Feel free to send him an email at tarek@contentmarketo.com or contact on Twitter

8 thoughts to “Why Startups Fail? How to prevent a failure?”

  1. Hi Tarek,
    It is indeed a great joy to be part of this wonderful roundup. You did a wonderful job in bringing out the expert’s answers.
    I am so glad to say that this post has been mentioned in my updated blog post, and I am glad to post that link here.
    https://www.pvariel.com/amazing-bloggers-featured-posts-philipscom/
    Also for your kind information, I curated this post on the pages of BizSugar, Twitter, Growthhacker, LinkedIn and other social sites.
    Keep up the good work.
    Keep sharing.
    Best Regards.
    ~ Philip

  2. Hey Tarek – thanks for posting my response in this very informative article. Looks like most people agreed on the lack of market need, although the other answers supplied by the experts are certainly valid points in many cases.

  3. Thank you very much for your inputs, I learned a lot from you and I hope my readers will also love this and be able to take something with them after reading this amazing post.

Leave a Reply

Your email address will not be published. Required fields are marked *