Creating a startup company is hard, and it takes a combination of skill, luck and hard work to succeed. You can control two of these variables so your time should be spent creating the best product you can.
These are the top 20 reasons that startup businesses close.
- No Market Need – startups succeed because they are solving a particular problem
- Run Out of Cash – unfunded or spending recklessly
- Not The Right Team – lack of motivation, expertise or common vision
- Outcompeted – better synergy or funding can give competitors an advantage
- Pricing and Cost Problems – a great but expensive product may not sell
- Poor Product – the end result can be disappointing to the user
- No Business Model – a great idea is not sufficient, the company needs a monetization model
- Poor Marketing – a great product will not advertise itself, and selling to the wrong audience is death
- Ignoring Customers – focus should always be on the end user
- Product Mis-Timed – creating a new idea too soon or too late can be detrimental
- Lose Focus – changing your vision or product scope creep
- Disharmony With Team or Investors – tension between the team or yielding to investor demands creates problems
- Bad Pivot – without data and traction this can lead the company in the wrong direction
- Lack of Passion – purely profit motivated can cause you to lose traction
- Bad Location – talent and ideas is only the start, you need to be where your customers are
- No Financing or Investor Interest – this may indicate a lack of demand or limited potential
- Legal Challenges – growing and expanding into different markets can cause unexpected issues
- Not Utilizing Advisors or a Network – connections are key and the ability to reach influencers can open huge doors
- Burnout – a poor work life balance causes too much juggling and stress
- Failure to Pivot – unwillingness to admit a mistake is costly for your startup, disappoints employees and frustrates customers
