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Why Many Startups Fail and What You Can Do to Avoid It

Launching a startup can be a huge risk, but it can also lead to a lot of rewards! It is no secret that launching a startup is risky due to the high amount of failure that affects a large percentage of startups. With the incredible amounts of time, money, and energy that you are investing in your startup, it is important to ensure that it is set up for success! Just because of the nature of startups, it is easy to fall into some habits and mistakes that will end up hurting your business. Being aware of some of these things can lead to business failure, you can make sure not to do them or to fix your current course if you have fallen into them!

Why Many Startups Fail

Ineffective Business Model

Unfortunately, just because you have an excellent idea does not automatically mean that you will have a successful business. Creating and following an effective business model is just as important as the premise of your business itself. There are many ways that a business model can be ineffective – too simple, too complicated, or not even having a business model in general! A business model needs to set realistic goals, easily-measured benchmarks, and provide a clear model through which you wish to run your business. A business model that is overly complicated or unrealistic can also create problems for your business. It may be necessary to consult a professional to help you create a business model that will work for your startup. Or at the very least, get some feedback on your own model if you have created it yourself to make sure that it can be effective in starting your business off on the right foot. 

Poor Market Research

Furthermore, just because you have a good idea does not necessarily mean that there is a market for it – or a profitable market at that. Even before launching your business, you need to make sure that proper market research is done to see if your business is viable. Market research needs to continue once you have launched your business to make sure that you are adequately responding to the needs of consumers. By conducting a survey from time to time, you can monitor if you’re successfully meeting the needs and wants of your target market, this can also help to point where you should improve your business. The most important thing is understanding your customers and being able to target the right group of consumers with your product. You also need to market your business based on your target group in a way that will reach them effectively. 

Poor Leadership and Teamwork

As the founder of your startup, you either need to have good leadership skills or you need to quickly develop good leadership skills. You will need to be able to recruit, inspire, and lead your team towards a profitable future. Recruitment for a startup can be difficult, as oftentimes you are short on cash and might not be able to pay people as much as they deserve to be paid – but if you have the right vision and passion for your idea it is easy to convince other people to believe in you and your idea. Do not be tempted to cut corners on your team by only trying to find cheap labor. You need skilled and passionate teammates to back you up because going at it alone is extremely difficult. 

Lack of Funding

They always say you need to spend money to make money – and this is especially true for a product-based startup. Launching a business with a lack of funding creates the risk that you will not be able to meet customer demand and turn them off to your business quickly. Even though it may be tempting to launch your business as soon as possible, you need to wait until you have enough money to run your business the right way. Startup business loans are a good option to provide you with the cash you need to get this done. Seek Capital is an example of a company that will provide you with financing options for your startup. Interestingly enough, while a lack of funding is a problem – having too much money is also a problem! In those cases, people often blow through money too quickly and do not spend wisely. This can hurt the business down the line and anger investors. 


Another mistake that can doom your startup is inflexibility. It’s easy to understand that after dreaming and trying for so long, you want things to work out a certain way and according to plan. At the same time, it’s important to realize that things rarely go to plan and you will need to make adjustments along the way – it is a learning process! Things will inevitably come up and you need to take it as it comes and adjust properly to ensure that your business will continue to be successful. 

Ignoring Customer Feedback

Similarly, it is easy to understand why people may be offended by negative customer feedback – you have put your heart and soul into your business! But when you receive criticism from customers, don’t take it as a bad thing. Instead, use it as a learning opportunity and an opportunity to improve your business. Ignoring problems will only hurt your business in the long run. The customer is the most important part of running a business, and treat them like it! Negative feedback also gives you the opportunity to rectify the problem with the customer and create a better experience for them to help ensure that they remain a customer in the future!

After working as digital marketing consultant for 4 years Deepak decided to leave and start his own Business. To know more about Deepak, find him on Facebook, LinkedIn now.


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