5 Biggest Reasons Why Startups Fail

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5 Biggest Reasons Why Startups Fail
ThemeJungle
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People start their business with much of a
hullabaloo, which is good. Being enthusiastic
about an idea you have dreamt upon is finally
going to get shaped. But through the course of
time, you find what you have planned for, its
not what it actually is. Putting it simply, there
are many startup problems which are faced when a
business is started by a person. A startup, is a
tough task putting an idea to the execution
level, with proper planning requires a lot of
dedication and commitment. This often loses its
way mid-way through the process because of the
challenges faced by startups. This is natural
honestly, people do lose their enthusiasm, some
lose the direction and many more factors are
there which hamper your dream. The key is here to
stay right in the path, with proper analysis of
the factors and reasons that determine the
success. So, what are those reasons actually,
which make the startup fail?
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Poor Management Team
This might be the biggest reason why startups
fail. A proper management team is the most
important thing for a business to succeed.
Because lets face it, you have the idea, the
planning too, but not a managing tool how you
are going to organize all the things in a proper
way? They are often weak on strategy, building a
product that no-one wants to buy as they failed
to do enough work to validate the ideas before
and during development. This can carry through to
poorly thought through go-to-market strategies.
They are usually poor at execution, which leads
to issues with the product not getting built
correctly or on time.
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Market Problems
A major reason most startups fail, is that they
run into the problem of their being little or no
market for the product that they have built. The
market timing is wrong. You could be ahead of
your market by a few years, and they are not
ready for your particular solution at this stage.
Market problems are needed to be determined
beforehand if you are going deep into this
field. The competition is cut-throat, which can
cut your throat literally. And that is why many
ideas are going downhill.
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Running Out Of Cash
This is the most common reason that startups fail
they ran out of cash. A key job of the owner
is to understand how much cash is left and
whether that will carry the company to a
milestone that can lead to a successful
financing, or to cash flow positive. What
frequently goes wrong, and leads to a company
running out of cash, and unable to raise more, is
that management failed to achieve the next
milestone before cash ran out. Many times it is
still possible to raise cash, but the valuation
will be significantly lower.
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Business Model Failure
One of the most common causes of failure in the
startup world is that entrepreneurs are too
optimistic about how easy it will be to acquire
customers. They assume that because they will
build an interesting web site, product, or
service, that customers will be at their
doorstep. But there are some things which are to
be kept in mind that this might work for some
startups, but not all of them. This might make
them a little bit skeptical about going further
with their plans but they need to realise that
everything doesnt come so easy because they have
an idea with them.
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Product Problems
Another reason that companies fail is because
they fail to develop a product that meets the
market need. This can either be due to simple
execution, or it can be a far more strategic
problem. Most of the time the first product that
a startup brings to market wont meet the market
need. In the worst cases, the product will be way
off base, and a complete re-think is required. If
this happens it is a clear indication of a team
that didnt do the work to get out and validate
their ideas.
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