Capital, ideas, the right team, good marketing and yet some startups fail to make a mark in the ecosystem. They are unable to create an impact, sometimes because one of the factors did not work out, or maybe because, it was not the right concoction of all the factors that go into making a successful startup.
It goes beyond saying that all the budding entrepreneurs want to make it big and aim for the sky. But sometimes, things go wrong and their dreams fail to see the light of the day.
To avoid such a mishap, take a quick look at what experts have to say about the reasons why startups fail.
Inadequate testing
Inadequate testing was by far the most mentioned reason for startup failure. It encompasses all the other things like that of not getting started, not understanding how to access the market, and not understanding the barriers to entry.
However, Greg Wright, founder of HATCH pitch put it quite succinctly,
“failure to test and validate hypotheses and assumptions,”
and its corollary,
“premature scaling (seeking/obtaining funding too early, ramping production/team/advertising before achieving product-market-fit).”
Not addressing an important enough need that customers are willing to pay for and not finding product market fit are other significant causes of failures.
It is also important for the companies to be in close connection with the customers and come up with something that would serve their needs.
Experts also feel that delaying the launch would be a major step that might lead to failure of the company.
The companies should be focussed and should not aim at scaling up without proper precautions.
Incompatibility in the team
Team Incompatibility was the second most mentioned cause of start-up failure. When the members of the founding team work together they can overcome the hurdles that might come their way.
Startups can fail because of a lack of a core vision that aligns with the founders’ values and purpose. It is important that the founders recruit, build and manage a team of people smarter than oneself. Lack of trust and that of business acumen, differences in commitment levels, financial expectations, goals, and culture are lead to failures in startups.
These items should be discussed among founders from the start to avoid surprises and ensure the founders are on the same page.
Lack of persistence
One of the major reason that can lead to a failure of a startup is the lack of persistence on the part of the founders and that of the team members. It is easy to think of an idea and the problem lies in the execution. Founders need to have the grit to overcome obstacles and burnout. Inability to adjust to the changing needs of the time can lead to a startup meeting its failure.
Other reasons
Greed can be a significant cause of failure.Internal greed can end up with a breakup of talented co-founders whereas external greed can lead to loss of customers and community.
Also, an absence of proper tools and reports as well as lack of a proper sales plan can be a big problem. Startups fail when they don’t understand the ongoing need to generate sales, set sales goals and how to achieve those goals.
Paying attention to these pointers can help startups from meeting failure.
Also Read: Bengaluru Is Slipping Down On The Global Startup Hub Ranking
