This section is for everyone who has failed in life. For everyone who has failed and has learnt from it. What an irony? Don’t you think? When we are teenagers we spend our time studying and learning, so we don’t make any mistakes. But, making mistakes is actually the best way to learn. The top reasons startups fails will help us anticipate possible problems and find solutions.
That’s why people suggest some initiatives such us FuckUp Nights. An event where three or four professionals share their bad experience, so we can learn from them.
However, as people usually say: “prevention is better than cure”. The reason we bring you the Top 7 Reasons Startups Fails hot off the press. Why do new business fail? Here, the most common fails from the analysis Top 20 Reasons Startup Fails by CBInsights:
1. The market doesn’t need you
It is positive to have excellent technology, figures about buying behaviour, great leadership background, experience, amazing assistants… However, without technology or a business model focus in the resolution of a certain problem, the risk of going bankrupt increases.
2. Having no cash flow
Money and time are limited and they have to be established carefully. How to spend money in a startup is a frequent enigma and a startup fail in 29% of new businesses.
Bad cash flow may be due to a low profit margin in your product. High wages or a delay between sales and revenue may increase the problem. That’s why in the world of entrepreneurs we say: “Cash is King”.
3. Your team is inexperienced
Having a team with different skills and capabilities is a key element to be successful. Many entrepreneurs who fails claim they would have loved to have KNOWLEDGE from the beginning or that the CEO had huge sale skills.
Another key element: the founder team can build a MVP by itself. If the team is not able to launch a product by itself (or with a small help of independent professionals), then the team shouldn’t be creating a startup. You can also use additional co-founders.
In the world of entrepreneurs, it’s a cliché to believe that your startup is like your child and the co-founder is like your partner. There is so much truth in it and 23% of startups know about it.
4. Work burnout
In spite of the fact that startups shouldn’t pay attention to their competence, the reality is not quite like that. Once the idea has been validated in the market, you will found many participants share the same space.
Becoming too obsessed with the competence is not good for you. But to ignore them is also a way to fail in 19% of cases.
5. Problems of pricing and costing
Fail number 5 is also quite important. When we talk about startups, fixing a price for a product is a very difficult issue. It has to be high enough to cover costs; but also, low enough to grab people’s attention.
6. User-unfriendly products
Bad things happen when you ignore what users want and need, no matter if it’s consciously or not.
Startups founders sometimes seem to fall short of products. It could be because they don’t really know what they are doing or they didn’t understand the way the market works before they started.
7. Products without a business model
Business models aren’t sexy. Neither they are funny. But they are extremely necessary in successful startups. Unfortunately, 17% of startups fail because they didn’t learn the lesson soon enough.
Founders who fail seem to agree in one thing: business models are key. Remaining is a single channel or not finding different ways to get money make investors lose their interest. Moreover, founders are not able to capitalize their business tractions.
Maturity, constancy and determination are fundamental to cope with problems and goals. No matter if you make a mistake if your final say is “get up and try again”. The power of a startup is the same power you can find in our shirt Florence.
This shirt combines a light pattern and sky blue stripes. It doesn’t leave you unnoticed.
Fight for your goals. Here and now.
There are more than top 7 reason startups fail. Here you can find a summary of the Top 20 Reasons Startups fail. Yes, the total percentage is up to 100%. It’s happens because some startups went bankrupt for different reasons at the same time.