why startups fail


13 reasons why startups fail, number 12 is a killer strategy

13 reasons why startups fail, number 12 is a killer strategy

Why startups fail – Have you set up a business and couldn’t breakthrough, are you afraid of starting a business for fear of failure, have you lost your hard earned or borrowed fund in a business, do you want to start a business, if your answer is in the affirmative to any of these questions, then this article is for you.

The hard truth is, not all business ideas are viable and profitable, cash flow however does not equate to profit, don’t get it twisted.

According to https://www.bloomberg.com  8 out of 10 entrepreneurs who start business fail in the first 18 months. By this stats, 80% crash out of business, are you surprised.

The following concepts had been treated over time:

  • Why startups fail
  • Why startups failed books
  • The 13 top reasons why startups fail
  • Startups failure rate 2017
  • Why startups fail according to their founders
  • How to know a startup is failing

Starting a business most often seems very viable and profitable on imagination and thoughts, but most often turns out not to be what is seems, this point is exactly why you’re reading this article to learn why startups fail, to as well prevent those pitfalls in your venture as an entrepreneur.

The following reasons are why startups fail:

#1. Choosing a non-profitable business/niche: How does that sound, unbelievable right? The problem with many startups is not far from the type of business niche they ventured into.

Not all businesses are profitable and viable in the first place, you need to define this first and foremost, many entrepreneurs do not think critically about a business they want to go into, they stand on their judgments that they have a little experience in such business.

Funny enough, some will just go online to print and read garbage about a particular business, before you say jack, boom they are off to a warming start.

It could even be that they get motivated by reading a success story of someone who’s into such business, this could finally define a profitable business for them, only to find out that in practice it’s not the best bet.

Don’t just venture into a business because you can afford the startup funding or you think you got a perfect shop for such business either.

You may also like: 13+ ways to grow your entrepreneurial business

How to identify a profitable business

Identifying a profitable business does not involve a rocket science,

  • Look for an idea that answers a direction question or provides direct response to an existing problem. Your ability to figure this out in an idea will lead you to a profitable business.
  • Look into yourself and identify things you are already good at, people will always admire these skill in you and wish you could take it serious, most often they turn out to be a good business idea. If you are a good writer with strong command and manipulation of words to draw people’s attention with a compelling call to action, then writing and publishing could be a good bet for you.
  • Is there an existing market for an idea you are giving a thought. Your goods are to be sold to consumers and buyers who really care about them. If you can’t identify a market, then the business could as well be a red flag. Identify your potential clients and supply what they yearn for.
  • Carefully observe your prospective competitors: What are they doing, how are they doing those things and what strategies are they using. Are they thriving by verifiable standards, can you do something a bit different with same focus and buyers satisfaction in affordability and pricing in mind.
  • Carry out surveys on whatever business you finally arrived at, find out if there are peak seasons for such business, ask sellers what feedback or complaints they’ve gotten from the consumers over time, are there pricing issues, quality etc
  • Your business ideas should be trendy according to the industry.

With the above points you’re off to a flying start, otherwise why startups fail.

#2. Inadequate cash reserves/capital deficiency:Finance is the live wire of any business, you need money to execute your profitable business ideas. You will need a sufficient positive working capital to operate successfully any day.

In essence, it has been proved that working capital measures the efficiency and financial health of a business, lack of capital provides unending business challenges.

A good working capital positions a business to access loans and as well attract investors.

In essence, you should seek capital efficiency and stability to back your business upon. You will need to keep a portion of capital as backup just in case you run into business crisis, with adequate backup capital you can get up and running almost immediately and the business continues.

How to solve the problem of capital deficiency

  • Effective crowd funding: The saying that two or more good heads are better than one applies here, you ought to have joined a community of people who assist themselves financially by contributing to one another in times of fund needs. In crowd funding, you pitch your business ideas to a community of investors who are willing to support you, kindly join one today.
  • Angel investors will help you out: These are people who have money and are willing to invest such money in your business idea, so long it’s a viable one.
  • Microfinance banks: Microfinance banks will avail you the needed funding to get off the ground, just meet their terms which is not jaw breaking.
  • Seek family support: There could be people in your family who have idle funds, do not hesitate to tell them, this could be a very good avenue
  • Apply for government grants: Grants are unique ways you could get funds for your startups.

#3. You do not understand the market: If you do not understand buyers and consumers habits how then do you intend to serve the market.

The choice and taste of consumers is a propelling factor you will have to master, if you must remain in business,why startups fail is that they lack adequate knowledge of the target market they intend to serve.

They usually think that anything can sell considering the population and track records.

How to understand the market

  • Determine who the buyers are
  • Their age and sex
  • Their taste and choice
  • Their ability to spend
  • What they’ll likely spend their money on
  • Their attitude towards pricing
  • And general acceptability of certain goods and season in which such goods are sold, knowledge gap on these are why startups fail.

#4. Inadequate pricing: Setting your price going into the market is one factor you will have to get right. Keep a note that you’re venturing into a market with established competitors, it therefore stands that there are existing prices which as well control the choice of consumers.

Dominant competitors usually have high price attached to their products, while those playing catch up are by implication expected to give a moderate or low price to gain acceptability first, then may consider price review when their products get finally accepted.

You may also like: 6 top customer service skills that will grow your business

How to get your pricing right

  • You must not set your price above existing competitors at first, test run a moderate price not too low but not higher either than the market prevailing price.
  • Know your customer, can they afford your price, if yes then gamble, if no then play safe.
  • Once your pricing does not cut into your cost, leave it low
  • Identify what the market is willing to pay.

#5. You simply go blind on your competitors: Your competitors are your huddles, seek to perform better and gain general acceptability. If your competitors set a pace, you will have to cover it up and possibly improvise for them to play a catch up at least for the record and business advancement.

As true as it sounds, existing competitors may be hard nuts to crack for reasonable years to come, but keep grinding and identifying their weak points, that’s where the code lies.

How to watch your competitors

  • Capitalize on their weakness and explore the market.
  • Monitor their pricing strategy, it’s your major problem
  • Move with trends and technology along with your competitors
  • Offer something unique and different from the usual, with an eye on the market, drifting from these are just why startups fail.

#6. You seem to be a jack of all trade: How many products do you think you can offer at the same time, your competitors have so many products in the market as such you want to meet this standard, your failure is unavoidable with this kind of mindset in your early stage in business. A jack of all trade will definitely lose concentration. You may not have the kind of staff strength at their disposal, besides they have been into business for years and have learnt what works and what does not you’re just setting out so take it easy, this is why startups fail and many are still towing this direction

How to avoid this problem

  • Have a timely plan of concise and realistic goal channeled on a specific product
  • Do not follow the crowed, however not in quality service delivery
  • Master your art
  • Strive to offer your best to the market
  • Do not compromise your standard.

#7. Depending so much on old customers: This does not mean to negate the fact that customers are kings and should be pampered. There’s no limit to how many customers you can acquire for your business.

You do not depend so much on old customers that your business gets unstable each time they decline patronage. Old customers will most likely bring bulk business, but in event where they choose to try something else, it affects your bottom-line significantly.

Be on the look out to acquire more of new aggregate customers whose patronage will sum up one day to bulk purchase, you can do with them and feel even far comfortable.

How to deal with this

  • Acquire and keep every customer
  • Follow up with your customers to understand how they wish to be served
  • Listen to your customers and effect necessary changes as soon as possible

#8. Bad management:management issues had contributed a huge to why startups fail in recent times.

What is management, this is the coordination and organization of activities of a group of people as well a business so as to achieve set down goals and objectives.

This is likewise concerned with creating and formulation of corporate policy, organizing, planning, controlling and directing the business resources to achieve objectives.

How good had management of businesses concerned themselves with making effective and flexible business policies that benefit the consumer satisfaction which should be paramount.

They should have the ability to organize business resources in a streamline that should enhance productivity at all times.

How to correct bad management

  • Management should be formed and lead objectively
  • Feedback from customers must be welcomed
  • Employee should be allowed to have a say since they interface mostly with these customers. They should be accommodated in business meetings where key policies are formulated
  • Management should motivate the employee for maximum output
  • A good management should be innovative
  • A good management should forecast ahead
  • Management must discourage waste of resources
  • Why startups fail is that management most often neglect planning
  • Time management should be key.

#9. Choice of business location:Where your business is cited plays an important role in the overall success of such business.

Your business should be targeted at your customers’ area of density. Available market should be considered, you must not spend a lot to convey your goods to the market, you should be readily accessible.

Your business should be in a location that generates most customer traffic, the best location increases brand visibility to market itself, the competition it faces from businesses, cost of operation.

Consider these factors when choosing a location

  • Accessibility, consider local transport links if your business relies on deliveries, the road should as well be accessible and must not be too far from the target market
  • Security, location can increase or reduce your odds of being affected by crime, ensure your premise is safe
  • Competition, your nearness to other competitive business is crucial to your success, if your competitors are heavy weights and there are so many of them around that axis, kindly choose a different location.
  • Availability of skills in the area, can skills obtainable in your business area satisfy your need in employee, what is the employment rate like as well. Choosing a location that’s lacking in required talent may not be too good for you, thus why startups fail easily.

#10. Lack of proper business plan: What informed your choice of business in the first place, probably how profitable and how much revenue you can generate in a short while?

You’ve seen people venture into a business, you then come to a conclusion that it will be good for you since everyone is into it, what a wrong idea.

A business plan is formal written document containing business goals, with clear methods on how you can attain these goals as well the time frame within which these ought to be achieved. It’s like a road map into your business that otherwise suggests you do not have direction.

The aim, direction and time set down to pilot and achieve whatever intentions it is in in your business must be spelt in clear terms, otherwise how do you intend to build a castle on air, thus why startups fail with reckless abandon.

How to correct this

  • You must have a business plan
  • It should describe the nature of your business
  • The sales and marketing strategy should be plain
  • Your financial background
  • How you intend tackle loses
  • How to make most out of your profit
  • How to avoid bumps on your way

#11. Poor marketing approach:Startups that easily fail lack media exposure and channels effective for their survival.

Why would you not have a budget for your media exposure, even brick and mortar businesses are exposed.

Leverage the power of the internet and announce your business, it’s that easy.

Report has it that as of June 2018, 55.1% of world’s population has internet access. It’s being estimated by the International Telecommunication Union that by the end of 2018, 3.9 billion of global population would have access to internet.

From the stats above, you can judge it yourself what a great disservice startups are doing to themselves by reserving their businesses and enshrined to offline population alone.

If your business serves a local population, ensure your phone numbers, email address, website address, office address and location are vividly seen.

How to correct poor marketing approach

You may also like: How to get startup funding for small business

  • Create a website for your business to showcase your products
  • Get social media channels like face book fan page, twitter handle, whatsapp etc, interact with your customers on these platforms for more leads
  • Use Google locator if you serve local market/population as well to target local customers,why startups fail is that they think these channels do not have much to offer.

#12. You lack unique value proposition (UVP): This is your ability to improvise by rendering the same service in a different but unique way.

Come to think of it, are you the only one rendering services in your brand specification, in most cases no, this is where your unique value proposition comes into play to distinguish yourself from the crowd in value and service to attract or compel customers to look your way passionately without even knowing why they’re doing so.

Look at your competitors and the market, monitor what they are doing, then design an approach and product that is best suitable and irresistible, which could offer additional benefits than they already do to the existing and target customers.

This is not an easy feet to achieve, but with detailed market analysis, products review and effectiveness you will arrive at something that really worth your effort for business success.

How to correct this

  • Be innovative
  • Take a market survey of customer product satisfaction ratio
  • Consider price review
  • Look into the future by forecasting in an ever changing business community.

#13. You lack feedback channels: Can your customers easily contact you without hitches to lay complaints on your service delivery and brand perception, the answer to this question in the 21st century defines why startups fail and why others succeed.

Your customers should be able to reach you, you need feedback to put you on your toes. Treat irate customers with care, these are customers who actually care about you to a great extent otherwise they wouldn’t had bother you.

Study had proved that dangerous customers hardly and may never complain or get angry at you, what do they do to satisfy their dissatisfaction about you, “they simply walk away” and that means you lose a customer who will not only walk away, but will raise negative publicity about your brand among prospective customers, which is far dangerous and why startups fail.

Feedbacks from your customers expose your weakness, and it’s in your best interest to work on them.

How to correct feedback lapses

  • Have a suggestion box in your business areas
  • Ask customers their perception of the brand through word of the mouth
  • Use survey to collect data on customer brand perception, it’s such an effective tool.


Bad customer service sums upwhy startups fail, outside finance in a startup settings, your customers are next in line, you are expected to handle and treat them with every care they deserve.

Study in customer service had shown that you do not get extra opportunity to correct the first impression, what does that define, it means you must get it right the very first time.  Your customers’ perception about you the first time goes a long way to determine if there will be a repeated business or not.

How to correct bad customer service

  • Provide regular training for your employee, they should know that the customers are the basic reason you are in business
  • Employ customer centric employee
  • Motivate and challenge your employee to do better
  • Only customer centric employee should have direct interface with customers, others are good for back office.

You may also like: Best banks for small business loan

Having read why startups fail, it’s time to amend and apply principles contained in this article to your startup so as to outlive the many startups that collapse or failed within the first 18 months.

Do you need help with business solution, let me know.

If you think this guide “why startups fail” is worth seeing by every business oriented fellow and has helped you as well, kindly share it please to the larger world.

Thank you for being here.

3 comments on “13 reasons why startups fail, number 12 is a killer strategy

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