Every start-up has a dream of becoming the most successful but the reality is that most of the start-ups fail and do not end with a success story. In each startup’s failures, we learn something and it is always vital to test the idea before the startup. The startup survival rate is less not only in India but also globally.Aspiring start-up founders are so passionate about their idea that they fail to look at it from a comprehensive perspective and often skip the challenging questions they would be asking themselves.
Why Most Start-Ups Don’t Survive
Let's discuss some of top reasons for startup failure
No market demand for the product – In the start-up scenarios, several companies believe that their business is unique, innovative and the money will begin to flow in from the investors. Most of the start-up founders don’t understand completely how the product might be able to achieve success in the market, especially in the early stages. Before launching, if start-ups could validate their products in beta-testing, it helps them in reducing the risk of market rejection and their start-up failure.
Lack of skills – Besides professional expertise, founders should focus on their skills as they sometimes can’t perform what is required for a business to be successful in the take-off stage. The founder and co-founders should be equipped with the skills and abilities that will enable them to compete strongly. The team working in the start-ups should be equipped with good skills and the right person should be placed at the right place and at the right time.
Ignoring cash burn – As most of the start-up founders are engineers and technicians, they build the product or solution to one problem and they launch officially. One time launching the product includes a lot of investment and this can be one of the major problems. Low-profit margin, delay in clients payments, high payroll costs may arise during the business operations. By avoiding being extravagant such as spending much on fancy offices etc helps to prevent cash burn.
Reluctance to get feedback & criticism on prototypes – Many start-up founders prevent others from seeing their prototype until and unless it is ready. Founders also hesitate to get feedback from potential customers which are vital to them. Starts up afraid that someone might steal their prototype idea and this prevents them from showing their ideas to the people. The start-ups need to get feedback from the professionals who tested and implemented those suggestions in the product improvement.
The market might still not be ready for the product – Some of the start-ups that launch their products very early are not ready to face the demand in the market. Others launch too late without noticing that it is too late already. One of the key factors is that start-ups should question themselves with their competitors’ benchmarks in view whenever sales are not taking off. They must be ready to put their effort and capital in another market to prevent any further loss.
Poor leadership & weak team – A great leader helps to inspire a compelling vision for the company by hiring committed employees instead of hiring top talent who may fly to the next offer soon. Employees who are committed to the vision and mission of the company will help the founders to realize their ultimate goal.