Topmost Reasons Behind The Failure of Startups


Share on LinkedIn

topmost-reasons-behind (2)

Every day people come up with great business ideas. We all have those talks with friends and families about business ideas. Having a business idea is not all. With the idea, it is important to have the potential of executing that idea.

In each country, people start a startup with some unique ideas. Some ideas might not be unique but the execution can be. Unfortunately, 90 percent of startups fail within the first 5 years of business. Spending 5 or more years on your startup idea is a lot of work. Entrepreneurs invest a lot of capital and time in businesses but due to really simple issues, end up in failures.

Let us jump on the main topic and understand the top 10 reasons why startups fail and what can be done to avoid failure:

1. No weight in the idea:

As mentioned, to start a business, entrepreneurs need a basic idea of business. What can be that idea? Usually, businesses start with the solutions to offer. Entrepreneurs can research the pain points of people. By conducting a proper analysis of pain points, Entrepreneurs can bring out multiple solutions. But what if there is no need for such solutions? What if people are ready to bear the pain but not ready to spend money on solutions? What if the solution you are offering is not that significant? Ultimately, the objective of each idea should be to solve people’s problems.

If you are offering a solution, then you need no extra efforts to make your business a big success. But here the concern is the weight of an idea. Entrepreneurs should understand that any business idea should be worth using. People should actually be searching for that solution. If not, customers will not spend money and time on your products/services. Make sure your business idea has a big requirement. As per a research report published by Forbes, 42 percent of startup failures are due to ‘no market need’.

2. Lack of capital:

Entrepreneurs need to estimate the cost associated with business expenses. Businesses can take loans or even invest some money from savings. Many Entrepreneurs prefer connecting with investors. Investors can be individuals or large scale organizations who help small Entrepreneurs in their career. It is obvious that investors charge a certain share of profit. The question here is how to estimate the cost of business? Since the startup can be anything you wish, you can calculate the total amount of money required in it. But business expenses are always unpredictable.

Entrepreneurs should be able to arrange potential capital for businesses to be prepared for uncertain situations. One way to overcome the problem of capital is to convince investors. Make sure you create a fabulous business presentation for an investor meeting. Do not forget to add all USPs in the presentation. Make sure you deliver a digital presentation to investors that can help you gain more success. Once potential investors are ready to invest in your venture, you need not worry about lack of capital issues.

3. Lack of digital interfaces:

The startup can be of a boutique, restaurant, software development company, travel agency, etc. No matter what industry you chose, what field you work in, it is essential to be present on the digital platform. Digital interfaces can be in the form of mobile apps, websites, social media platforms, etc. Startups who does not offer digital interfaces are considered unprofessional. Digital interface can be in the form of mobile app development, website development, etc.

4. Website development:

Each business should have a professional website. Websites are used for marketing, brand awareness, promotion, 24×7 access to information, communication, etc. as mentioned in the third point, digital interfaces are really very important. Half of the world’s population uses the internet. Before a decade, there were a few million people with access to the internet. Now the scenario has been changed. Since people prefer searching for any product or service on the internet, it is essential to be present on the internet. The main reason behind many startup failures is a deficiency in lead generation. Another reason is no platform for users to interact with your startup. Offer them complete information about the startups and mention the different ways customers can contact you. By referring to websites, many consumers get help in purchase decisions.

When we talk about website development, it is preferable to outsource the task to professionals. Make sure your website is being developed by professionals. The website should be easy to understand and all navigations should be handy. Make sure the buttons are readable and attractive enough to convert leads. The layout and design of the website should match the business form. Web development services can build highly responsive websites. Since maximum Google searches are made from smartphones, it is extremely necessary for website developer to build responsive websites. The web pages should provide equal experience on mobile as well as desktops. Make sure the website is SEO friendly.

5. Mobile apps:

If you have a small business, then developing a mobile app can be expensive and even unnecessary. Rather registering your business in popular apps can be beneficial. Let us take an example. Let us say you have a small cafe. You can register your cafe on various food delivery apps and on-demand apps like Uber Eats. Every mobile app development company has the aim of creating apps that are beneficial for startups as well as large enterprises. After all that matters is a digital interface to interact with consumers.

But if you have started a business in the manufacturing industry, you can create a mobile app for your employees which can work as an ERP or Customer Relationship Forum. The app can be used by all employees to get information and updates about the business. Again it is recommended to hire a professional mobile app development team for this purpose. Mobile apps can increase your overall business performance and revenue as well. Once the business starts picking up the pace, the possibility of startup failure decreases to null.

6. Social media:

We all are addicted to social media, entertainment, and internet.
Facebook has 2.27 billion monthly active users. This report was generated by Statista. It is obvious that businesses try to appear on social media and be active on it to generate more leads. As we know, famous social media platforms are used as search engines and hence, being active on these platforms is necessary. No matter what your business is, keep updating about any news and updates on social media. If you are publishing blogs on your websites, then you can repost those blogs on social media platforms.

You can also use LinkedIn for various purposes. Images, infographics, small blogs, videos, etc. content should be shared on social media to attract prospects. Certain startups related to the fashion industry, food industry, travel industry, etc. can benefit a lot from Facebook and Instagram. Instagram is a social media platform that is used especially by millennials a lot.

7. Digital marketing:

In all the above points discussed, we have mentioned the importance of digital interfaces. But simply having accounts on social media and having websites is not enough. There are billions of websites in the world. On Google’s first page, only 10 websites are displayed. Hence, what you need is digital marketing. Startups with great ideas usually fail due to poor marketing skills. Hiring sales resources is not enough. In this digital savvy world, it is important to make an online presence. Digital marketing can help your website be on the first page. There are various techniques you can use in digital marketing.

These techniques involve SEO, PPC, SMO, Content marketing, etc. The professional digital marketing service providers can help you get on the first rank on a google search. Not only small-scale businesses are searched on google but also manufacturers search for vendors on the internet. Organic digital marketing can be time-consuming but it is highly effective. Startups can opt for organic search engine optimization because it is cost effective. If the startups wish to gain more leads in less time, they can opt for paid ads. Paid ads can be done on Google and social media platforms.

8. No geographical expansion:

Startups usually wish to explore business worldwide. There are many startups that have clients around the globe. Some service providers like software development services, content writing services, can work with foreign clients without meeting in person. Such service providers can increase their revenue by connecting with these offshore clients. While dealing with offshore clients, startups should keep in mind about the geographical barriers. These barriers can be language problems or work culture. While dealing with such clients, make sure you understand their work culture. Keep in mind that your website, as well as resources, understand the value of geographical expansion.

9. Poor management:

Entrepreneurs starting startups might have good knowledge of business, product line, etc. But management skills are also important. It is important to manage all employees, clients, resources, infrastructure, supply chain, etc. there is various software available for proper management.

10. No Usability testing:

Usability testing involves users and consumers. In this type of testing, consumers can offer their reviews and ratings about the products. The startup team can also use the products and analyze what can be the problem in the product. By doing so, startups can understand the possible problems and resolve those problems during the product development cycle. Usability testing can help you save time and cost by detecting problems earlier.

11. Nothing unique:

Startups with unique ideas or unique execution can do better. If the idea is common and the idea execution is also common, then the chances of success decrease. Startups should offer something that is not offered by others. To deliver extraordinary services and products, businesses should conduct deep and thorough research. Research can include primary or secondary surveys. Startups can ask their existing clients about their pain points and work on it.

12. Customer support:

Customer Support
Every business should offer after delivery services. If you are an owner of a startup, you can not ignore the value of customer support. Once the product is delivered or service is delivered, businesses should be ready to offer after delivery services. These services can involve queries related to product usage, or other issues. Startups can take help of professional customer support services. There are third-party customer support providers available in the industry. These organizations are expert in offering the best in time solutions to end users on your behalf. Also, businesses can use chatbots to reply to your customers. Though such customer support can be out of budget for startups, there are many alternatives available in the market.

13. Poor supply chain management:

There are many small-scale vendors who provide raw materials to large companies. These vendors can face trouble in managing supply chain processes. It is important to understand the available stock, client requirement and time to delivery gaps. There are many cases where vendors fail in providing orders on time due to the poor speed of production. To manage all the supply chain processes, startups can take the help of certain software and online web portals. There are also many app development companies that can help vendors manage such processes in real time.

14. The software is a must:

If you run a startup and do not have customized software for different processes, then you are spending your valuable time. Time is vital. Startups need more time for all tasks as compared to large enterprises. The software can help in may processes such as managing payroll, managing customer relation portals, managing accounts, for developing software, etc. Now developing software in-house can be costly for startups. They can purchase software online or ask a professional to build customized software. The software can save cost, efforts and time of all startups.


Millions of startups are present in the market. There are many young millennials who are trying to achieve great success by starting unique business lines. These startups need a lot of attention and maintenance. There are various reasons startups can fail. We all know the common reasons but in this article, we have discussed the other vital reasons.


  1. Hi Hemendra,

    I’d like to add one more reason: Startups improve customer pain points.

    If you were the founder of a start-up who just opened a new Blue Ocean, you would want to move forward, to build a stronger and bigger company. You might buy business books, attend conferences, or employ consulting companies.

    I’m sure two messages would come across from these field gurus, academics, technology vendors and management consultants. Always focus on Continuous Improvement and Customer Centricity. Pain has to be improved.

    On one hand, you are being brainwashed by the “pain has to be improved” phenomenon, while on the other hand, no surprise here; your big innovation is attracting imitators.

    Very few Blue Oceans are immune to copying; it is usually just a matter of time and effort. Internet and new technologies have sped up this process and made it easier.

    Using your resources more effectively than your competitors is a key to business success. Spend even a tiny amount improving something that does not give you the desired result and you are taking a step away from achieving a higher pleasure peak and a step closer to weakening your competitive advantage.

    Even if you improve those things that are either important or painful to your customers, if they are not linked to your Branded Pleasures, it is destructive because it would eat up the resources of your Branded Pleasures, further lower the pleasure peaks for customers, make it look more like its competitors and be easier to copy. You waste your first-mover advantage.

    Continuous Improvement turns into Destructive Improvement. The Blue Ocean becomes a Red Ocean.

    For more details, see “Why Great Brands have a Large Pleasure-Pain Gap”

  2. And another. Get a Customer Relationship Database (CRM) that fits the workflow of the business. For a start up it may be worth getting a simple to use bespoke database which is owned by the business. Don’t buy an off the shelf package, and pay a recurring monthly fee if it doesn’t support what the business needs to manage the contacts.

Comments are closed.