Common Reasons why Startups fail
India has now come to become the world’s third largest ecosystem for startups witnessing a mammoth development in this nascent sector, which people from all walks of life are taking to. While, a Flipkart or an Ola may rise above the rest to attain the status of being mega-successful startups, do all of them make it? The clear answer is no. So the question that rises here is , what leads to their downfall? Here at Startup-Buzz.com, we analyze common reasons why startups tend to fail.
- THE IDEA ISN’T IDEAL – If there is a fallibility in the rudimentary idea, a startup cannot go very far- it entirely rests on the shoulders of the concept. Sometimes, the idea may be good – but it may not be a suitable time, the market may just not be ready for it. A dearth of requirement will bring the startup crashing down
- MONEY MATTERS – There is only so long that the Venture Capitalist’s seed money can keep the company afloat, post which if the growth continues only in single digits, it could prove to be troublesome, and cease to attract newer investments and funding. A number of startups have had to declare insolvency the past year, including Quirky, Gilt and Spotify.
- GiOD IDEA , BAD EXECUTION – Entrepreneurship is a harsh and unforgiving stead to assume. It renders everything textbook and pre-learnt notions as a negation of reality with every moment a new challenge, and every decision posing itself as a new, unexplored avenue. The leaders steering the wheels of the startup need to take calculated risks else bad execution might lead to the downfall of the startup.
- CUT THROAT COMPETITION – Yours is an idea, well created , well executed – textbook perfection, so what is the problem? Well, someone else just developed an improvisation on the same concept as yours and it is catering to the people better! Startup scenario is known to be capricious. A startup has to constantly be on the lookout for the changing needs of the people, and alter its stance/product/services rendered accordingly. Many startup gurus would affirm with the notion that stagnation kills it like none other.
- THE TEAM IS WRONG – Every successful startup needs an ambitious, industrious team of experienced workers who form the spine of the organization at its nascent stage. And these people must function together in harmony- this collaboration is an indispensible part of every startup that materializes. An understanding must exist in between the members, each one making up for another’s shortcomings. If this ceases to exist, it endangers a long term growth plan for the startup company.
- NO BUSINESS MODEL – So when one does embark upon the startup journey, there are bound to be pitfalls, it is an accepted notion. Not being prepared or not having the foresight to deal with or recover from these occasional pitfalls that may transpire may raise serious questions upon the lacking of a business model only to bring the company crashing down. Every move that the company decides to make must be pre-studied. It must also be perused and followed up with data analysis justifying each of its decisions.