What are the Reasons Behind Startup Failure?

Startup failure

A Startup is an entrepreneurial undertaking which is a newly opened and considered as a fast growing business. The aim of startups is to create and serve innovative products, processes or services. Though they increase in number, nevertheless the number of startup failure which leads the business to shut down increases too.

As the number of failures prevails, many types of research have been made to find out the reasons why the startups “sink” instead of succeeding. Though the reasons are many, we will try to focus on the main ones.

The market doesn’t accept the ideology

Consumers often aren’t ready to new supplies. They are biased against trying new products and/or services. The producers themselves are satisfied with their product without thinking that the marketplace is not ready for the innovative product. Startup failure starts when the entrepreneurs think to change the market to fit their product rather than to change the product itself.

Competition is too high

Don’t overestimate your business idea. The 21st century is rich with all types of products. No matter what you are producing, the competitors are always there. You encounter a Startup failure without sufficient competitor research. Ask yourself what are you doing that others don’t?

Poor management

Weak management team leads to startup failure. They often create a poor strategy and build a product which no one wants to buy or they create an incorrect product.

No cash? Then face a startup failure

Ran out of cash? Be ready for failure… CEO must be designed to properly say how much money is left and whether that is enough to reach the company aim and build a successful financing.

The name doesn’t call

Your business should have a name to remember. It is the main key to the identity of your product. In many cases, it is considered to be the most valuable asset. Your business should be so productive to turn the simple name into a brand.

Too high prices

Very often startups put such high prices on their product that the customer prefers to buy the one with a lower price which the other company offers. The quality and the price should walk together.

No communication with the customer

Always talk to your potential customer to understands their needs. Without measuring, optimizing, validating the data received from the customer, you as a startup won’t manage to build a high demand product.

Though according to Harvard Business School studies 75% of startups fail, there are the ones which succeed due to their hard work and the following reasons:

  • Commitment and motivation to the whole team which helps to stick with a chosen path.
  • Patience! Successful startup team doesn’t hurry to get the best results. They know that All good things take time.
  • They are always ready to observe and learn new things and use them in their practice.
  • Ability to raise enough money to reach the next step of main milestones.
  • Technical and business knowledge+technical expertise to develop the product.

Examples of succeeded startups

While googling for a successful startup campaign example, we have come across too many ones. But there is one which we would like to notice. Kaltura video platform is one of those few to succeed. During its work, Kaltura managed to raise $25 million being used by such companies as Groupon, Bank of America, Harvard and HBO. The main key to the success was targeting several niches: education, enterprise, and media. This way they enabled many ones to get involved in their business. Of course, this doesn’t mean to have all fields covered, just the ones which could gain many audiences.

Entrepreneurs’ short keys to success

While googling for information about successful startups, we came across to some essential causes towards the success. One of them refers to the product which should be perfect for the market and meet the existing demand. Another reason is that the best entrepreneurs take every single thing into account. To be more specific,  let’s have a list of must-do activities:

  • Offer personalization
  • Put end-users in control
  • Don’t do too much at once
  • Be global but customize each market
  • Best-in-breed technology
  • Strong team collaboration
  • Foster beneficial partnership

In general

For sustainable business, you need more than a good idea. Even if you take these steps there is no 100% guarantee to become a successful entrepreneur. Of course, if you follow the advice your chances of success will increase. And don’t forget to be a good example for your employees to foster their motivation and build a path to success.


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