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Why Startups Fail?

Education Why Startups Fail?


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Feb 25, 2022
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How Often Do Startups Fail.jpg

Are you aware that 90% of startups fail?

I am aware of failure since I am an entrepreneur. I've done some really dumb things in the past. I've also had the good fortune to succeed on a few occasions, though.

I've been able to comprehend some of the less well-known causes of certain firms' failures along the way, as well as, more crucially, why some of them succeed.

How many new companies fail?

Startups fail nine times out of ten. You would do well to reflect on this harsh and depressing truth. Before starting their company, entrepreneurs might even want to compose their failure post-mortem.

Why? Because occasionally, a highly upbeat entrepreneur needs to be reminded of reality. These sobering numbers aren't meant to demoralize business owners; rather, they're meant to motivate them to work more and smarter.

What qualities do successful startups share?

There are several traits that successful startups share. I don't want to give you a full list of success factors; instead, I want to point out some of the most important ones.

1. The product fits the market perfectly.

According to Fortune, "They make stuff no one wants," which is the "top reason" firms fail. A thorough study of businesses that went out of business found that "lack of a market need for their product" was the main reason why 42% of them failed.

If you're going to invest time in creating a product, be sure it's the appropriate product for the correct market.

2. The businessman pays attention to everything.

attention to everything..jpg

The leaders of Dijiwan wrote the following when their business failed:

A successful firm is not always guaranteed by a great product concept or a capable technical staff. Because it is not their responsibility, one should not disregard a company's business operations and problems. It may ultimately prevent them from having any future with that particular company.

Ouch. They offered a superb product. They had a capable group. What were they missing?
Dijiwan's internal workings make it evident. The "boring things" and important facets of business operations were ignored. The CEO believes that "leading is my job." In the CMO's opinion, marketing is what I do. The lead developer believes that "coding is my job."

However, a startup can't divide up its tasks in that way. Roles and responsibilities will overlap in a startup since the environment is much more organic. Things can grow from small to enormous. Business processes, business models, and scalability problems are some of the startup's most crucial elements.

Successful businesspeople are aware that they need to work on their company rather than in it. The essence of the business might be lost in the weeds of presentations, phone calls, meetings, and emails for the entrepreneur.

3. The business expands quickly.

Who asserts that rapid expansion cannot be sustained? Who even gives a damn?

Entrepreneurs want growth, investors need growth, and markets demand fast growth. In a competitive market, rapid growth indicates a winning concept.

Wantful's (inactive) founders admitted that they fell short of achieving the "very rapid growth necessary to acquire later-stage venture finance." They required funding, but because the business didn't expand quickly enough, they were ineligible for additional financing. That marked the start of the end.

Growth drives further growth, which drives yet further growth. After many months of operation, a startup should not be content with modest single-digit growth rates. If the growth doesn't occur after a predetermined period of time, it won't. A corporation that isn't expanding is getting smaller.

The second main cause of startup failure is that the business "runs out of money." They ran out of money. Why? They didn't grow quickly enough. If your company grows quickly, you can avoid some of the worst things that can happen to a new business, like losing to the competition, losing clients, losing employees, and losing your drive.

Early on, rapid growth is a surefire indicator of future success.

4. The group is skilled at bouncing back.

bouncing back..jpg

Every startup is supported by a group of individuals. The better the team's chances of success, the more versatility they possess.

The term "versatility" is frequently used to refer to someone who possesses multiple skills or talents. In the startup environment, versatility goes far beyond a person's skill set. It calls for a mentality. Startup teams must be able to change products, adapt to new ways of paying employees, use a new marketing strategy, switch industries, rebrand the company, or even completely dismantle an existing company and start over.

The key is to bounce back from blows. Teams that can pull through difficult times in harmony also have the special ability to recover together.

Additionally, I've observed that startups with co-founders succeed more frequently than businesses with a single founder. A cofounder establishes a partnership. It's much easier to avoid some of the dangers of a single charismatic leader since there is far more accountability. A co-founder will also possess the abilities that you lack.


You're fortunate if your startup succeeds. You've accomplished something that 90% of startup companies haven't.

Other firms flourish for more modest reasons, despite the fact that success stories like Google and Facebook include a lot of luck. They have a product that fills a demand, they don't disregard anything, they expand quickly, and they bounce back from the trying times of being a startup.

You're positioning yourself for big success if you possess these four qualities.

What traits do you notice in the startups that are successful?
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