Why do Startups Fail ?

  Ateet Sanghavi   Jan 23, 2014   Uncategorized   Comments Off on Why do Startups Fail ?


Many of us dream of being able to quit our jobs, and starting our own line of business. Sometimes we look at our peers running a business and think of a hundred ways we would have done it better. After a sounding from the boss, we sigh and wish for a day when we will be our own boss. Sometimes we think our ideas or inventions will leave the world gaping and awestruck. But when you actually take a step like that, there a lot of things you have to consider. In fact, 9 out of 10 startups in India fail. Here are a few reasons why startups fail:

  • Lack of Planning and Market Research
  • Government Compliance and regulatory: India is ranker 132 by World bank to do business in. Entrepreneurs tend to spend too much time in other things than just doing business.
  • Lack of funds: A startup is an investment like any other. For it to bear fruit, a lot of hard work, time and money is involved. One of the most integral parts is of course, funds. Your savings may see you through a part of the process, but to go all out you will need investors. They may be difficult to find, but if your idea is inspiring and your passion is sound, it will eventually work out.
  • Too much expenditure, too soon: Most entrepreneurs tend to indulge in unnecessary expenses during the crucial stages of their business. You may convince yourself that your business will fail without the new state of the art machine, or that you need a swanky new website to be able to prove to your customers that your business is credible. It is essential to prioritize your expenses- choosing to spend only on the things which will truly add value to your business.
  • Ability to take strategic calls: As a businessman, remember to play on your strengths. If your strength is creating the product and not selling it, then stick to the creation bit. A lot of startups start off with people who are ill equipped to take calls which will strategically enhance their performance. If you find yourself in such a position, choose to consult a specialist. The trick is to recognize that you are in fact, in this position.
  • Legal Considerations: A lot of times a great idea starts off being the most creative thing you have ever thought of. A lot of ideas or inventions, work best in a hypothetical space. A space where the law, the economy and the consumer are not considered. Before you go all out, quit your job and start your own enterprise to create something, pause. Check the feasibility of your product, especially from the legal point of view. If anything can stump your business and your great ideas, it’s the law.
  • Being a One Man Army: Being a startup enterprise comes with a lot of considerations. When you start off, you may feel the need to do everything on your own. Many entrepreneurs try to handle everything on their own. Either they feel that the others are not doing a good job, or they think that they don’t need help from a third party. Being a one man army, is never a good idea. One man is inherently incapable of doing multiple things perfectly. Keeping this in mind, hire staff which is able to multi task and has a strong skill set.
  • Inability to take feedback: As a startup, improvisation is of utmost importance. Your new idea or your new business is not going to work seamlessly. Take time to make peace with that. There can be a number of things which you have missed, which someone else may have caught. Be wide open to feedback. After all you are catering to customers. Turn over everything that is told to you in your mind and pick out the good advice. Then act on it.
  • Poor Marketing: In this day and age, marketing is the back bone of any good business. Considering the various new media and platforms available to us, marketing can be targeted and effectively utilized, even on a small budget. Treat marketing as importantly as you would treat your core idea, don’t dismiss it.
  • Unwilling to take risk.

Establishing a startup is definitely easier said than done. You have to work with really high stakes and give it more than your all. While the statistics are quite demoralizing, there is no reason why your startup will not be the Apple Inc. of tomorrow, provided you do everything right.

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