why-startups-fail
why-startups-fail
Reading Time: 2 minutes

There could be several reasons start-ups fail, I have mentioned top five reasons because of most of startups are getting failed.

According to the surveys and market study almost 90% startups are getting failed in the first 3 years. It is a very old proverb that any business needs 1000 days which is 3 years.

Before you start startup it should be very clear that you are going to take “Stay Hungry, Stay foolish” path which is not going to give you revenue in short term. There are no short cuts.

1.    Market Problem

The market has an unsolved problem or an opportunity gap which your idea can fulfill and make decent money in the process but identifying the market problem is not easy.

Market demand for a solution depends on the timing, so you have to calculate time for building the solution, release and also forecast future opportunities and solution scalability accordingly.

Suggestion: Discuss your idea with domain experts and business persons. Validate your idea before you start building the solution.

2.    Focus

Any startup starts with one idea but founders are idea people and they are getting lots of ideas over the period of time. Once founder starts startup he/she meets lot of people, do lot of market study, do lots of comparisons, ask lot of people for mentorships and try to grow his/her startup with unexpected speed.

Most of the time this could lead to distraction and waste of resource because of focusing on too many things at a time.

Suggestion: Be focus on the vision, focus on the problem which is most painful, study risks, prepare plans.

3.    Management Team

Management team should be full time worker, “startups which are part time, gets failed”. Team should be very focused and very strong in management. You can have team with different skill sets as per the departments you have i.e., if it is a tech startup you must have technology leader, marketing leader, domain expert.

Weak strategic decisions, communication gap between team and management, weak human resource management, gap in product development which is not market fit can lead startup to get fail.

Suggestion: Find right co founders, mentors and initial employees.

4.    Finance i.e., running out of cash

No matter how great your idea is or how strong team do you have, without finance you can not run the business. Prepare multiple excel sheets such as solution development expenses, first year expenses vs revenues, 3 years and 5 years expenses vs revenues, revenue generation to reach break-even point.

Marketing expenses are difficult to forecast and, in that case, you should see your vision and figure it out.

Suggestion: Budget in advance and plan for funding accordingly. Keep proper book keeping and as per the budget plan inform investors well in advance so there is no gap in cash flow.

5.    User experience

When it comes to product development user experience is very important which differentiate your product from competition.

User experience is part of product development and give a proper weightage and higher quality UX designers.

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