Top Reasons Why Startups Take a Fall

Top Reasons Why Startups Take a Fall

Business failure reasons

The corporate world is flooding with startups in almost all developing nations. While some lucky ones survive the floods, the others drown into the ocean. A startup involves more than just a great idea. Even great startups fail, and there are various reasons why startups and a consistent set of factors that make them successful. So, here the top 5 reasons why startups fail:

1) Poor management team:

If the management team isn’t strong enough, the business may face problems in finance and quality of the products. To achieve success, a startup business needs a diverse management expertise to stay ahead of the competitors. The management team is responsible to plan, study, control and organize all activities regarding the business on a regular basis5.

2) No exit strategy:

While it is important to stay optimistic about the future of your business, it also important to have a backup plan in case things don’t work as expected. A well planned exit strategy basically prepares you for the worst.  Devising such a strategy requires serious planning and continuous reviewing, but in the end if everything works out well, it proves to be worth the time and energy.

3) Poor Marketing:

Your advertisements will be considered fruitful only if your target audience is converted into leads and finally into customers. Effective marketing is one of the most essential skills of a successful business and can only be achieved by knowing your target audience. With so many competitors running parallel, it is very difficult to grab attention of your customer, who is already being presented with 10 different products of the same kind. So the only solution is to carry out a unique marketing campaign. You have to be persuasive and establish your brand very well, so as to retain customers and form a loyal bond.

4) Financial Issues:

The prime motive for a startup to assure its sustainability is to expand which cannot be done when you’re running out of cash and are unable to raise more. It is one of the biggest reasons for the failure of startups. You may want to reduce the unnecessary spending’s and cut out on a few things to keep the business financially balanced. Resort to the most cost-effective sales and marketing tactics available.

5) Business Model Failure:

The important aspect of your startup should be the point where you select a business model that suits and promotes the nature of your product and services. A large number of failed startups are the products of not-so-well business plans. So, it is essential to choose a sustainable business model requiring a thorough overview of your organization such that it answers every question that a potential customer might have.