When an entrepreneur leaves his day job to follow his passion and make something out of him beyond the 9 to 6 routine, the expectation and hope is that it would result in a startup that would not just bring them closer to their dreams but also would offer something new that the world needs and values.

But with the number of startup launch being inversely proportional to the number of successful startups, there are very valid reasons that lead to an early and loss full startup demise.

Without further ado, let us look into the 7 reasons that lead to a major startup decline

1. Less to No Market Need

One of the biggest reason behind a startup’s failure is lack of market ned. More often than not, businesses launch a product or start offering services that have no place in the market. The mishap that arises because of this reason can be tackled by testing the product first in a small segment of the market, which is made of the prospective buyers.

This is what successful mobile app development companies do with their MVPs. The whole idea is to test the idea with a functioning model before going ahead with a full launch in the market.

2. Lack of Cash

The second biggest reason behind a startup failure is business running out of cash. The reason why this happens is because more often than not, entrepreneurs get into a business thinking that it would obviously be accepted and till they run out of their finances, the product would start getting them 5X more revenue.

It is this expectation that make entrepreneurs not seek out investors till much after they have spent more than half of their seed money.

3. Outed by Competition

The opposite of no market demand and something equally as bad as that is getting outed by competition. What happens usually is that you launch a product that holds the ability to be a loved and used product and with time even becomes it. But the moment your product or service creates a market validation, competition starts creeping up. And, if your business does not have that necessary technological and resource capability, you get outed.

Thus, it is very important to keep upgrading your team’s resources and skills so that they are able to keep you one step of the competition at all times.

4. Poor Marketing Efforts

So you have an amazing product or a disruptive technology that have been tested enough to ensure your brand’s success. Your pricing and packaging along with the logistic strategy is also on point, but for some reason you missed out on creating an even clear promotion strategy.

Your reason could be any but the end result in all cases is the exact same – consumers are unaware of your existence, pushing your brand towards a very early demise. Another important to note here when we are talking about promotion is promoting your product or service on the wrong medium.

Choosing a medium of promotion along with the time of promotion has become equally important as actually promoting it.

5. Terrible Team Coordination

The other factor that leads to a startup failure is a team that doesn’t get along or are not even moving towards the same goal. How many times have you heard of college friends coming into business together and starting a business? A number of times, right? While the number of times it happens is awful lot, the times when they see actual success is awfully low.

It is beyond imperative that you find and get together a team of co-founders and employees who understand the nuances of startups or even if they don’t, at least they are willing to work on logic and calculated risk than instances.

6. Unthought of Pricing Policy

When it comes to product or service pricing, there are a number of permutation and combination that you can apply in your business. You can either keep it low and aim at breakeven till you have created a standing or you can trust your quality and keep the price on slightly higher range and risk losing on the opportunity to reach millions.

In the end of the day, you will have to rely on market research to decide on your pricing model.

7. Mis-Timed Product

Let us look at this point through a Blockchain example. Now, we all know how disruptive and in talk the technology is, but can you imagine develop and launch a blockchain based product or service and expect it to gain mass adoption when nobody even knows of its true potential? No, right?

It is all about the timing. Your product or service should neither belong to an era that we crossed some 5 years back nor it should give solution that have a huge probability of happening after 5 years. It should answer to today and at max an year after that.

So, here were the 7 reasons behind a Startup Failure, do you know of any other reason? Let us know in the comments below.

Last modified: May 1, 2018