Why Startups Fail
Why Startups Fail Not only are there myriad reasons why a startup may fail, but more often than not a combination of factors come to into play for a startup to fall short of success. Therefore, it is the same as asking what not to do in order to succeed—if a startup avoids all the pitfalls that lead to failure, it would succeed. Ultimately, the question seeks the formula of success for startups.
Why Startups Fail Single Founder:
If the startup has a single founder, achieving success is an uphill task. Businesses are about relationships, and investors do not put much confidence in a solitary founder who was unable to get even those close to him on board. In addition, teamwork is crucial for the success of a startup and the single owner does not have much going for him at the start.
There are reasons why more startups are found in one place than at some other place. Experts are available; the benchmark is higher; people who understand your work and those who would be interested in working for you are found there easily. In addition, supporting industries are located in the same place and people you get to meet may often turn out be from the same business. Startup hubs have all these and startups in these locations have an advantage over others.
This is also a common mistake. Often startups target marginal niches and run themselves into a corner. This tendency exists as many startups assume they are not ready for the contestant or want to be up and running before they enter the fray. They choose such niches to avoid competition. However, there is no way around it. Startups should not stunt their prospects simply to play it safe.
Imitating existing ideas are not the best way to go about it. The history of successful startups is one of the original ideas and not one of imitating others. What is the source of original ideas? More often than not, revolutionary ideas emerge from problems the founders are trying to solve. Google came into being because Larry Page and Sergey Brin were unable to locate stuff online; Hotmail happened because its founders were facing a problem exchanging emails at work. Look at a problem and imagine a startup that would solve it.
Startups must be flexible and be able to adapt to changing scenarios in order to take advantage of it. There are many examples of successful startups that began with a different idea and ultimately found success with another. Obstinacy and inflexibility may cost dearly.
Launching too early or too late:
Startups that launch too early may find themselves lacking in handling their own growth. In worse cases, they may even end up coming out with a substandard product. Inversely, waiting too long is also not desirable. Delay and procrastination can only nibble away the resources. The best way is to set a deadline.
Too little or too much Money:
The startup must bring enough money to take care of the cost involved in getting the enterprise up and running and must have enough to take the next step in the ladder to success. The classic way of spending too much money is to hire a big staff. It is a double whammy. It not only increases the costs, but it also slows the startup down. It is best not to hire if it can be avoided, pay staff in equity rather than salary and, in the initial phase, only hire those who write code or get you more consumers, as these are the most crucial at the start.
Sacrificing users for profit:
Money is important. However, during the initial phase, it is best not to worry about the business model too much. Making something that the consumers want is much harder than making money from them. Therefore, the startup should concentrate their fullest attention to making something that the consumer desires rather than be distracted by profit.
There are many other reasons why a startup may fail but these are central to the success of a startup. Startups are hard work and half-hearted efforts do not pay dividends. Founders should join in motivated teamwork with the right employees to not only set up their business in the right place and on the right platform but also come up with a product that is desirable to the consumers. Businesses are about relationships. Startups would do well to remember that.