The Real Reasons Why Startup Fail: No, It’s Not the Idea


Share on LinkedIn

Behind every startup is a dream that breathe ambitions, desires, and irreplaceable persistence. So, why do startups fail? If entrepreneurs know what they want and are on a mission with total conviction, what stops them from achieving it all? Things are even more simplified now with technology making it easier to start and manage businesses. For example, while in past there were a lot of compliance hiccups and unwanted time being spent on taking care of legal formalities, online legal service providers have significantly simplified the process to register a private limited company and manage day-to-day compliance.

The demand for new products and services are high as world has seen Uber and Tinder writing their success stories in an uncharted territory. Then what makes a startup fail? Let’s dig in deeper!

Are bad ideas the reason that startups fail? No – Google was also considered a bad startup idea when it was proposed.

    1. The personal readiness for the role

Most of the early startup entrants may find this exhausting due to fear of uncertainty. This is because we have plenty of cases where entrepreneurs take out equity on their own home. Entrepreneurs putting themselves and their family members in continuous debt is not new – we often hear of similar cases in the entrepreneurship.

Entrepreneurship may leave you in a position where it gets tricky to circumvent such problems. Best is to stay prepared. You will be under pressure to balance the emotions that you traded for your startup dream, to move fast in business and still keep good mental and physical health, and develop a compassionate mindset. Ask yourself if you are ready to invest ‘all-in’ of yourself in this new role? Consider consulting your friends, family and the closed ones. Maye be it is just the right time for you and the right version of you as you decide to begin this entrepreneurial (mis)adventure.

    2. Do your market research

You have successfully launched a business but have you researched about the product/services you offer in the market? But then, what about the demand survey of your offerings. Such surveys are steps to gauge whether your idea will turn out to be a successful one. Also, it helps you to identify existing problems that your potential users are facing and give you a fair amount of idea on what needs to be solved?

You cannot be fully sure of being the first one to roll out such offerings as chances of similar business offerings in market are high. Reach out to them or at least read about them to identify whether they have succeeded? If no, why did they fail? You will need answers to these questions and find out a way to differentiate yourself in the market.

It all boils down to how you execute the offerings once the market research is done. Most of the businesses fail to launch their MVP, not confining to the discipline and no brand to lean on. They fail because they go all-out without much of the market research and try to push products that are not required at all. Sometimes the product may evolve as an experience but then it may also limit the number of re-purchases.

But then, what if your market research fails? It may happen that this will have you pushing your products towards the incorrect target market. Your researcher can go bizarre with wrong data on market size. The product positioning may misguide the business even before it is launched.

Keep the answers of these three questions ready before you are ready to launch:

  • Are you clear about your target market and its specific problem?
  • Is your business able to provide the best possible solution to that problem?
  • What is the size of your target market? Is it well-defined? And most of all, is it big enough to sustain your new business?
    Optimism to function as a one-person team

Y-Combinator’s co-founder Paul Graham points out three important factors that drive the startup from back-end.

  • A team of genuinely dedicated people
  • Offering precisely what your target customers want
  • Squeezing outflow of cash as much as possible

From these 3 factors, if you are to achieve the latter two, fix the first one. Good people will build a significantly useful product and will also fix your problem of unnecessary expenses. Make sure you create and retain your A-team for the startup as are the ones leading the attack from the front. The research suggests that solo founders may cake around 3.6x longer to outgrow the startup no matter how gung-ho they are for the growth.

An ideal scenario will involve having at least one person onboard from each department – marketing, development, designing, etc. If you have the right team who are experts in their own work you are almost certain to provide customers with what they really need – 100x easier than you’d rather do it alone. As a team, the long hours get more bearable and you’ll have each other’s’ back through all thick and thins. The perils of being a one-man army are not confined to just inefficiency but limiting new perspectives in the longer run.

    Inability to focus in a single direction

A new business demands a lot of things from your end but then somewhere you will need to pause and introspect. You may be multitasking but then you will have to ask if it actually moves the needle. If it doesn’t, stop wasting your efforts.

Most startups will fail due to routine stuff hampering their growth. Here are few of those activities

  • Too much coffee. Yes, it’s a trend and if you are the one, who is starting a new one, break this one as you may well be spending more time talking than sipping.
  • Networking – whenever, wherever. Sure, business partnerships can turn profitable but it is recommended to network wisely and schedule it if possible.
  • Don’t be in a hurry to form board of advisors once you get funding
  • Stop multiple partnership businesses if you don’t see any revenue in a predetermined time.
  • You should not be channelizing your own and your team’s effort on PR and social media unless you are highly confident of your target customer and the right product for them.

Now, you only have two important things to focus on if you really want to succeed. There is no third way out.

  • Users

Understanding where they come from and what they seek from your offerings is an important aspect of success. User engagement is equally important as the acquisition part because that’s how you will be able to engage them for a longer time.

  • Product

This is the heart of your startup – never run out of your efforts when it comes to improving product offerings. Talk to users, address their issues and enhance their experience by altering your product accordingly. If you really want your startup to be a successful one, you’ll be spending the majority of your time in improving your product rather than getting caught in other petty stuff.


Though 90% of startups fail, the entrepreneurs working for its success will still keep fighting the war and may somehow settle for average results. But you can’t be that. The road is open and free to reach way higher from where you are currently. Take the right steps and make correct choices in your entrepreneurial journey. Ensure avoiding the mistakes that are common across all the startups that failed and you’re in for a successful startup ride.

Shrijay Sheth
Shrijay Sheth is the co-founder at Legalwiz provides legal consultancy and accounting services for Indian business entities; ranging from registering a business to bookkeeping. Shrijay is a seasoned entrepreneur and a serial Startup evangelist with interests in eCommerce, legal services, and business consultancy.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here