Why do startups fail?


The majority of startups fail during their first year of existence. There are various reasons for that, but we would like to share 7 reasons why it happens. 

  1. Burnout. It is not a secret that business requires a lot of work and consistency. However, some companies fail to distribute their sources right and to put the effort into something is really needed to be worked on. For now, burnout is the reason for failure for 8% of the time. 
  2. Legal challenges. It might not be that obvious but having a business is accompanied by legal challenges. A lot of companies fight in court for years before being shut down, while also spending their budget on lawyers, royalties, and other legal representatives. This detail is especially important when one thinks of going international. 
  3. Disharmony between founders and investors. It can be costly for both investors and co-founders to get back on track if they used to have any misunderstandings. For ArsDigita, it cost 20 million $ to get back to the same revenue they had. 
  4. Lose of focus. This issue is the reason for companies to shut down 13% of the time. Being distracted by different projects, personal issues, etc., can prevent a company from its success, as it will lack consistency in its performance. 
  5. Mistimed Product. If you announce a product and launch it too early, customers may rate it as not as good enough because its quality might not be that great. At the same time, if you release your product too late, you may miss the right window to do so. That’s why you need to find a perfect time to launch your product. 
  6. Ignoring customers. Your clients are the most important source of feedback you have, and that’s why it’s essential to consider their opinions. If you will not get enough output from customers on time, your business will not succeed. 
  7. Poor Marketing. How you present your product is crucial. But first, you need to determine your target audience and what they demand the most. For there, you can decide on your marketing strategy, which may include an email campaign, LinkedIn campaign, and use of other social media for your promotion. 

Source : https://www.cbinsights.com/research/startup-failure-reasons-top/


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