Reasons Startups Fail and How to Avoid them

When you begin a startup, you must keep in mind that you will face challenges and the road that you will be taking is not going to be easy. Even if you have a great plan and proper funding, it is challenging for a startup to be named as a unicorn or a decacorn. To be a good entrepreneur you need to identify risks earlier and learn how to tackle those ventures.


The following are some of the reasons why Startups fail and how you can avoid them:

Business Model failure:

Many entrepreneurs feel that it is extremely easy to acquire customers. They assume that the product or the service they provide would make the customers come to them. The cost of acquiring a customer is greater than the lifetime value of that customer.

In a business model, you need first to analyze how to find a scalable way to acquire customers and then figure out if you can monetize those customers at a higher level than your acquisition cost. When you understand how to acquire customers and manage your acquisition cost, your business model will not be a failure.

Poor Management:

Business is not just about acquiring the customers and selling them your products and services. Unless you have a great management team, your business will not grow. The management team is responsible for building the strategy for your company, ensuring the product is delivered on time, creating a strong team to do a particular work, etc. When your business has a weak management team, some of the most important tasks which you have to do to develop your company will not be done. To avoid then, make sure that you form a good management team which organizes everything that happens in the company.

No funding:

Many startups and small businesses fail due to lack of funding, and thus they run out of money and have cash flow problems.  To avoid such problems, you need to learn how you manage your income and expenditure. Make a list on how much you will have to spend on wages, loans, rent, taxes, etc. and then subtract the outgoings from the incoming and calculate the amount of money you will have left. When you make such calculations, you will have a track on where you are spending unnecessarily and prevent such expenditure.

Lack of skills and discipline:

Entrepreneurship is not about thinking of an idea, making it into a business and hiring people to work in that business. One of the main reasons why startups fail is that the owners fail to have the skills or expertise in the field. Anyone can come up with an idea and hire people to do it, but to make your business successful, you need discipline and dedication in your work, and you must also guide the employees you hired to do the job in a better way.