Why Startups Fail – Most Common Reasons

“Let’s build a startup”- this is what most youngsters who are starting on their career journey are seen conversing about with their buddies. Very few youngsters want to join in the rat race of big corporate houses and do a tiresome 9 to 5 job. However, what our young blood forgets is that if they don’t know about the right techniques for making a startup a success, no matter how much effort they put in, their startup might fail. So, let’s look into the main reasons why a startup fails.

What is a Start-up?

Start-up is, in a nutshell, a newly launched business led by a group of individuals. Think about any big, successful company. Be it Apple, Microsoft or Coca-Cola, all were once startups.

Why do start-ups eventually fail?

There are some main causes why startups usually don’t work well and eventually die out and many of these underlying reasons have been briefly discussed below.

1. Feasibility issues

Most start-ups are initiated all of a sudden and proper planning and effective market research is carried out beforehand. The members plan to provide comfort to the people through their product but sadly don’t understand two important factors

Is the product practically feasible?
Is there any other similar product on the market that does the same task?

These are the two main needs and if we fail to identify these, the chances of failure are more than 70 percent.
To overcome this, there are two methods:

Introduce a new product
Introduce a better product

If there are many apps available for ordering food and your newly launched food ordering app has no USP( Unique Selling Point), the start-up will prove to be a huge failure. So, market research and feasibility are very vital in making our startup a success.

2. Finance crisis

A start-up is initiated with a very small investment but this amount is not always enough. If a business faces many loses in its initial phase, the investment goes into vain. Some people borrow funds from investors too and these initial loses can lead to loss of the trust of investors too. This is obviously a very dismal state for the members and forces them to shut down their newly- launched businesses at such an early stage.

3. The inefficiency of some of the team members

Initially, all the members of your start-up team might be very motivated and inspired to turn dreams into reality. But over time, this motivation can fade away what inefficiency in work can pave its way. This, if not handled timely and in a proper manner can lead to huge losses in the future and can ultimately lead to your business collapsing and your dreams shattering.

4. Pricing Issues

Nowadays, brands have lost their value. Unlike older days, today even if a product is not branded, is of a good quality and is of a lesser price than most branded ones in the market, it eventually becomes popular among the consumers. Therefore, it is essential that your prices are not too aggressive otherwise they can be the sole reason for your start-up’s failure.

5. Competition

Honestly, the world is full of competition. There is no dearth of quality talent . When youngsters step out in the business world and realize this, there hopes to go down and the fear of this excessive competition demotivates them. Hence, with time they give up on their startup dreams which were at one point of time their only ambition.

6. Lack of good marketing

“Everyone knows how to build but a few have the skill to sell”. This is undoubtedly a quite well-known statement. If you keep your prices too high, no matter how better our product is compared to other products in the market, it will still attract a lesser consumer base. Hence, it is of utmost importance to keep the right prices and thrive only on superior quality. But there is one sales aspect without which it can be very tough to make your product a big success in the markets. And that is highly effective marketing skills. If you know how present your product in the best possible way such that it appears better off to the public compared to other products and can make it stay in the minds and hearts of the people, no force in the entire world can stop your startup from being the next huge market success.

7. Loss of Focus

When people initiate their startup, they do so with a pre-determined aim and as and when those purposes get fulfilled, the members build a certain level of confidence. But as our adults always say- there is a very thin line between confidence and overconfidence and when this line is crossed the next thing we face is a steep downfall.

Here is Gary Vee’s video on being focused.

Not only do people forget their focus, but also lose out on their patients. They forget that all good things take time to make a place in people’s hearts and eventually build their trust. Many youngsters lose all hope if they don’t receive the response from their consumers which they expected to get when they started on their startup journey. Eventually, this takes them a step closer to actually shutting down their business.

These are some of the major reasons why start-ups fail. But obviously, nothing is ever impossible. These reasons of failure have not at all been discussed to demotivate you or discourage your dreams and ambitions. But they have been discussed to make you well-informed in advance about the kind of downfalls you could experience during your startup journey and how you could make your journey a little easier by following these useful techniques.

8. Not investing in appropriate verticals

One of my acquaintance recently opened a tattoo parlor. He invested a lot of amount into machines and getting the overall decor. But, not into security and other aspects. After running for 3 months, someone broke into his shop via backdoor and stole a lot of his needles that cost him a lot of money. Neither did he invest in security, nor he had insurance. Thereby, If you don’t want to incur such sudden loss, invest in a good shutter door or something stronger.


  1. Thank you for the sensible critique. Me and my neighbor were just preparing to do a little research on this. We got a grab a book from our local library but I think I learned more clear from this post. I’m very glad to see such great info being shared freely out there.

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