Top Reasons Why Startups Fail – It’s Not What You Think

Why new businesses fail

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.

  1. No Market Need – startups succeed because they are solving a particular problem
  2. Run Out of Cash – unfunded or spending recklessly
  3. Not The Right Team – lack of motivation, expertise or common vision
  4. Outcompeted – better synergy or funding can give competitors an advantage
  5. Pricing and Cost Problems – a great but expensive product may not sell
  6. Poor Product – the end result can be disappointing to the user
  7. No Business Model – a great idea is not sufficient, the company needs a monetization model
  8. Poor Marketing – a great product will not advertise itself, and selling to the wrong audience is death
  9. Ignoring Customers – focus should always be on the end user
  10. Product Mis-Timed – creating a new idea too soon or too late can be detrimental
  11. Lose Focus – changing your vision or product scope creep
  12. Disharmony With Team or Investors – tension between the team or yielding to investor demands creates problems
  13. Bad Pivot – without data and traction this can lead the company in the wrong direction
  14. Lack of Passion – purely profit motivated can cause you to lose traction
  15. Bad Location – talent and ideas is only the start, you need to be where your customers are
  16. No Financing or Investor Interest – this may indicate a lack of demand or limited potential
  17. Legal Challenges – growing and expanding into different markets can cause unexpected issues
  18. Not Utilizing Advisors or a Network – connections are key and the ability to reach influencers can open huge doors
  19. Burnout – a poor work life balance causes too much juggling and stress
  20. Failure to Pivot – unwillingness to admit a mistake is costly for your startup, disappoints employees and frustrates customers
Why new businesses fail to gain market traction and fail before becoming established
Download Top Reasons Why Startups Fail before becoming established


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