7 Reasons Why Most Startups Fail

7 reasons why most startups fail

The startup failure rate is commonly cited to be at about 90%. While failure is not necessarily a bad thing and can make for good learning opportunities, it is a good idea to take note of the root causes of other people’s shortcomings. If you’re a young inspired entrepreneur looking to work on your first startup, avoid these 7 reasons why most startups fail.


Failure to address market needs

When building a product to sell, it is necessary to first consider the needs of your target audience. There is no point in launching a product, regardless of how good it is, that your market has no need for. As with any project, do your research first.

Lack of planning

Creating a business model should be the first step to launching any successful startup. While they seem tedious and redundant, having business plans help set you on the right path and guide you towards reaching your company’s goals.

Not doing any marketing

A product is not going to sell itself. Without putting any effort into marketing, no one is going to know your product even exists. While having a dedicated team of PR professionals is not necessary in the beginning of a startup, it is not an excuse to ignore marketing altogether. Spreading word of your new company is essential for its survival.


Financial issues

This is likely the most common reason for startups failings. As an early business endeavour, it is normal to not have a string of interested investors or a pile of cash in your savings. Spend your money wisely and put effort into attracting early investors. Running out of money before your product makes a name for itself is a clear indication of a failed startup.

Ignoring customer feedback

The first version of any product is likely going to have its flaws. It needs to run through a cycle of testing before it develops into something worthwhile. Always take the feedback and comments of your early customers into consideration. If one person sees a flaw in what you do, it is likely someone else will.

Failure to network

Networking is just as important as marketing. Many new entrepreneurs suffer from a lack of networks with investors and other meaningful connections. Don’t be afraid to attend networking events to speak of your new product. You need to utilize every connection you have to build a name for your brand.


Lack of passion

If you build a product that you lack the passion for and are only interested in from a business perspective, you run the risk of quitting when times get tough. Entrepreneurship is tough and requires dedication to get through. Therefore, the most valuable lesson of being an entrepreneur is creating a product you believe in. A company that lacks passion and drive will only create futile products.