The 10 Biggest Reasons That Startups Fail


Startups are essentially new businesses that people begin to run; they’re considered startups until they’re established and successful and not a moment sooner. Startups can be anything from a new shop to a new online retail establishment to an internet company; and it’s always a new one. Many people have big dreams and aspirations to create their own startup and eventually turn it into a major corporation that will make billions of dollars in revenue, and only a very select few succeed. Millions of people create startups each year, but there are only a few people such as Mark Zuckerberg and Steve Jobs who created small startups that turned into world-dominating corporations that are known everywhere and worth more than you could ever imagine. If you want your startup to follow in the footsteps of Facebook or Apple or Amazon, you’re going to want to know what it is that commonly makes a startup fail and you’re going to want to do exactly the opposite. Here are some of the most common reasons startups do not succeed.

There is No Business Model

You have to have a business model in order to run a successful business. Without a business model, you do not have a successful business. The first thing you should do before starting a business or company is create a successful business model, then have someone look it over, then make changes, then make more changes. Keep changing it until it is complete, thorough and absolutely right.

Location, Location, Location

Here’s a good concept; location is important. This is not just something people say when looking for a hotel or a new house. The same is true of businesses. Do you think that Louis Vuitton would do good business in the middle of a small town in rural Texas in which only 100 people live and 95% of those people live well below the poverty level? The answer is a resounding no; if you’re not in the right location, it does not matter how great everything else is about your business.

Leadership is Not Good

If you’re not a good leader, you will not run a successful company. You have to be a good leader who can manage employees and your business. If you are not willing to grow and continue to learn daily, if you don’t know what you’re doing and you’re not kind to the people who work for you, shop with you or use your product, you’re not going to succeed.

The Customer is Not Always Right

The customer is always right. Sometimes they’re wrong and you need to make them believe they are right, but you do need to listen to the customer. This is the person who is making it possible for you to even have a business, so do not discount what they have to say. The moment you stop caring what the customer thinks and needs, you are doomed for failure.

You Don’t do Your Homework

You have to know everything there is to know about running your specific type of business. You have to make it your goal to learn all there is to know so you can go in successful and make it a habit to keep things this way. There are fewer surprises in business when you know what to expect.

Not Enough Funding

One of the most common mistakes many startups make is opening their business without the right funding. You need ample funding and you need a business plan that will not utilize all that funding and leave you with nothing before you even get started. Do yourself a favor and work on a budget, get investors and make sure you have the funding to do what it is you are trying to do.

You’re Afraid to Make Changes

Change is necessary, especially in the early days of startups. You have to make changes to things you might not want to make changes to because they don’t work. This is not always easy, but it is necessary. Something you are in love with might be a turnoff to customers, and it will require that you make the changes necessary – without this mindset, you will not succeed.

The Price is Not Right

If you have a price, it has to be right. It has to be high enough to allow your business to run smoothly and efficiently, but low enough so that people are not turned off by it. It should be competitive, but not identical. It has to be just right. This requires ample homework and an ability to let go of what it is you had in mind when you began this process of creating your own business. This is something you should consider carefully before you finalize anything, and that’s because you don’t want to mess this up from the start.

There is No Market

If there is not a market for the kind of startup you want to create, it’s not going to work. For example, you might think that alligator leashes (not leashes made of alligator and sold for dogs) for pet alligators are a great idea, but not that many people have a need for a leash for their pet alligators, if you get my drift. Your business has to have a market. If it does not, you will not have any success.

You Don’t Hire the Right People

Your employees matter. You have to account for many factors, and some of them might be difficult for you to consider. For example, if you’re opening a bar, you do have to consider what your employees look like if you want to attract a certain type of clientele. This sounds discriminatory, but it’s often what people are looking for in trendy, hip locations. You have to hire people that fit the part, that do the job and do it above and beyond, and people who are willing to do the work and learn to improve on their job and their experiences as they become more comfortable in the role.

Photo by Joe Raedle/Getty Images


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