Startups

5 Counter-Intuitive Reasons Why Your Startup Can Fail

First things first:

The most common reason aka a lack of finance is not among them.

Entrepreneur and writer Rafe Furst says that startups fail when founders throw in the towel. He writes that all new businesses run out of money, but smart founders would find the way to work without capital until their pet project starts generating funds on account of the borrowed capital or revenue.

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Originally asked at Quora, the question Why do so many startups fail?” has gathered 100+ answers from successful entrepreneurs, investors, businessman, and startupers sharing their reasons.

Thus, James Ferdinand Lukanta considers top five reasons of fails as follows:

  • Co-founders fights
  • Lack of market
  • Late launch
  • “Build it and they will come” mentality
  • Not listening to users

New entrepreneur behind PlagiarismCheck.org Nancy Christinovich believes that startups fail when launched at wrong time and when their founders don’t have enough trust in what they do. Product and competition matter, too. But as Seth Godin says, “don’t find customers for your products, find products for your customers.”

Co-founder of Aha! Brian de Haaff claims that those willing to succeed have to “hit the spot in four key areas” and “have a little bit of good fortune.” He visualizes key areas as follows:

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CEO of Society3 Axel Schultze who worked with more than 100 startups and run five businesses himself reveals the most counter-intuitive reasons why new entrepreneurs fail.

1) Weak Execution

Most failing startups either work slowly or have a huge lack of judgment. Working too hard on product’s features, they forget about the market: they don’t build a customers base, don’t think about the right time to launch the product, can’t identify opportunities, or don’t bother about building strategic connections.

2) No Long-Term Vision

As a rule, young startupers focus on their product’s present features and don’t think about what this product would look tomorrow. It’s close to impossible to convince investors if you don’t have any plans and clear visions of where you want to take the company.

3) Superficial Research

The #1 rule for startupers to remember: you don’t create products for yourself but customers and the market. Many don’t spend time on in-depth research, don’t understand their target audience, don’t see the market needs, or keep on believing startup myths.

4) No Team

Another reason why your startup might fail: you have a weak team who has no idea on how business and market works. Technology, marketing, finance, operations – these are spheres your business partners and employees should know inside and out.

5) Lack of Connection

New entrepreneurs often underestimate the power of networking and don’t understand the importance of building influential connections. Some hope that investors would provide those connections, but it doesn’t work that way. Influencer marketing and business relations in media matter.

Speaking about funding gaps, Schultze doesn’t consider them a reason for startup fails. While many talk about money as if it’s a problem, he says that “lack of funding is a function of one of the above issues – not a problem in itself.” He writes that five mentioned weaknesses prevent startups from fundraising.

In case five is not enough to convince you, CEO of Snhyper Aman Barhla shares top 20 most common reasons of startup fails from ChubbyBrains.com (based on the research and analysis of 32 business failures):

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Do you agree with experts?

What are your thoughts on the most common reasons of startup fails? Share in comments or go to the Quora thread and join the conversation.


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