5 Common Reasons Startups Fail

reasons startups fail

The startup scene is an exciting one, especially in areas where it is thriving. While many startup founders are young and idealistic, the scene is not limited by age or gender. It truly is full of potential, with everyone dreaming of the big exit.

However, there is this popular statistic going round – that 9 out of 10 startups fail. While the numbers are probably not as simple as they seem, a large number of startups do fail.

When a startup runs out of money, it will have to fold or raise funding. Unfortunately, majority of startups face the latter option. And, depending on the startup’s particular setup, the founders may have to go through legal procedures, speak to a bankruptcy lawyer, file for bankruptcy, and so on.

While failure is something that is inevitable at times, knowing what can lead to it will help startups succeed instead. Here are some common reasons startups fail.

1. Startup founders live in their own world.

Startup founders can be from all walks of life, from all backgrounds. One thing they have in common is the passion for their startup. They believe in what they are doing so much that they may fall in the trap of forgetting the real world.

Founders may get all wrapped up in their vision/mission, that they ignore realistic elements such as market demands and real-world feedback.

One solution: have a mentor who can give an outsider’s point of view.

2. Startup founders create ideas, not products.

Great things start from ideas. Services and tangible products come from ideas. However, without ideas turning into real products or services, startups won’t really become a business. Simple as that.

The solution: make sure your idea can be transformed into a product or service.

3. Startup founders fail in strategy.

reasons startups fail
Continuing along the lines of going beyond having a brilliant idea, startups fail because founders don’t have a good strategy in place; or the strategy has too many gaps. It’s one thing to have an idea. It’s another thing to have a strategy for implementation.

More than simply having an overall strategy, founders need to look at the details. As they say, the devil is in the details. Everything – from sourcing materials and costing them, for example – should be examined in order to know whether they product/service is feasible.

It is thus of paramount importance that founders sit down to map out a solid strategy and evaluate it periodically.

4. Startup founders don’t know how to pivot.

When evaluating how one’s startup is doing, it is possible to find out that the initial idea/strategy is not going to work. There are two options for founders at this point.

One, pivot. Two, keep at it and hope for a miracle.

While miracles do happen, more often than not, startups who keep doing the same thing over and over again without any changes will fail. And miserably.

Founders need to learn how to be flexible and pivot if necessary. Changing direction doesn’t mean you’re giving up. If anything, it shows that you’re smart enough to allow for adjustments to achieve success. Read this article to inspire you: Five Super Successful Tech Pivots.

5. Startup members don’t get along.

This may not be the first thing to come to mind when thinking of reasons startups fail, but it may very well be one of the major reasons. Just like any business endeavor, the personalities and characteristics of people involved in a startup need to mesh. Startup founders – and eventually other members – don’t have to be best buds and agree on every single thing, but they do need some level of chemistry in order to reach a common goal. If people just don’t get along, the startup will crumble from the inside, leading to failure at some point.


If you’re at the beginning of your startup journey, bear these items in mind. Hopefully they will help you avoid failure; but if you still fail at some point, remember it is not the end of the world. Learn from your failure. Analyze what you did wrong, and then do yourself one better the next time around.

Related reading:

The Top 10 Mentioned Startups On Social Media

Startup conferences: Are they worth it?



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