Why do Startups fails

Did you know 90% of startups fail? Do you know why? Well, there are innumerable reasons behind the failure. But that doesn’t mean one should not become an entrepreneur just because of the risk and high failing possibilities. Yes, it is difficult and you have to be prepared for facing endless rejections and tough paths to follow.  But once, you get determined and focus on your business, then there would be no going back. 

So this article is about common mistakes that startups make and realize it much later.

The foremost reason can be this for sure.

The founders getting stuck on their idea and reluctant to pivot

How does a startup take birth? Because of an idea. So we can say that idea is the foundation of a start-up. But if the foundation is not strong enough then it is but obvious that it will fail. Many founders are reluctant to accept criticism of their idea. They do not find any flaws. And that’s the main problem. They become reluctant to make any changes. And that’s when the start-up fails. So be open to criticism and learn from your mistakes. 

Due to market problems 

One of the many reasons for the failure of a startup is market problems. Having no market for your products/services can lead to failure. For instance, due to lack of demand in the market. Many consumers may not feel the dire need for your product even if you are solving a problem. Good sales can happen when you solve a painful problem in tough conditions. Or it is also possible that you are a few years ahead of time. For example, if you create software that solves the problem, it is great but if people will need a strong and fast network that is not available to them, then your start-up has high possibilities to fail unless you make some fruitful changes. 

When Cost of acquiring a customer(CAC) is more than the lifetime value(LTV) of the same

People often fail to recognize this problem. When your expenditure is way more than the lifetime value of the customer then your startup is not going to last. In simple words, when you spend more money on acquiring new customers than you earn money from customers. If customers do not come back or do not make higher purchases then you are bound to incur a loss. Many entrepreneurs fail to notice this thing or do not calculate the CAC and LTV. 

Unaware of legal challenges

Yes, this is a common cause of start-up failure. Many founders remain unaware of the legal challenges they could face in the future which could result in shut down. So before starting anything, please be aware of the law. For example, many music-related startups fail, because many people aren’t aware of copyrights, royalties, other legalities, and the cost behind it. The music venture is a bit expensive and a lot of money is spent on legalities. So before you start, make sure you know the legalities behind the product/services you are going to sell. 

Wrong timing

This one is another problem. Many companies launch their products at the wrong time. Timing is the most important thing to keep in mind. Suppose you launch a new delicious ice-cream during winter. So it will undoubtedly fail for obvious reasons. Or you launch a product too soon, then also you can lose the window of opportunity.  So make sure you launch your product at the correct time.

When you fail to produce a decent quality product

Many start-up’s ultimate focus is more on marketing the product rather on the development of the product. If you do not produce a good product, no matter how well you market it, it will crash. So try to focus on your product first and then go for the other process because, in the end, it is the product that will speak for you. 

Take no notice on customers

If you do not think according to the customer’s perspective, the ultimate result will be of course failure. This is the root cause too. If you do not collect customers feedback or do not make changes according to feedback then no customer would be interested in your product. You need to make changes and adjustments according to them. They are the ultimate consumers. So you need to keep in mind the customer’s perspective. 

Working with the wrong team

Its important to have the correct people in your team in order to success. Many start-up fails because of this reason. When you don’t hire a correct team. Or you do not hire anyone at all, you are bound to get in trouble. Behind a successful start-up, there is a strong team. So think before you hire. Or at least hire people so that you don’t have to do all the work because there will be a point when you will not be able to handle all things at a time. 

So these were some of the common causes of start-up failures. It is imperative to be well-researched before jumping into any kind of business. And if you really want to be a successful entrepreneur, be determined and prepare yourself for the failures you are going to face. It’s just that no business gets the taste of success before tasting a failure, so do not give up and keep hustling towards your dreams.