10 Reasons Startups Fail and How Yours Can Succeed

With so many startups appearing out there, it may seem like it’s one of the best ways to start your own career as an entrepreneur. Contrary to popular belief though, taking your small business towards success isn’t as easy as seems at first glance. In fact, nine out of ten startups fail before even reaching the point where they’re making a profit. Another fact – half of all startups fail during the first year, while the rest fail within the first five years.

Those startups that do survive grow on to become large businesses, mostly because they successfully apply the principles we’re about to highlight.

#1 Poor Hiring Process

Many startups have joined the race for some of the best talents in their niche, thinking that a dream-team made out of these people would get the best results. What they fail to see is that it’s actually about building a team, one where employees can work together and complement each other.

Hiring process job interview

Instead of searching for the top talent, you should focus on getting a balanced team together. Of course, it goes without saying that the better they are the more successful your business will be, as long as they can all be part of the team.

#2 Going Forward Without Focus

Sometimes startups get sidetracked by irrelevant projects and forget about what their company is all about. This happens more often than not, believe it or not. I’ve worked at a video gaming company that suddenly decided they want to go in the comic book market. Of course – that failed, and so did the company.

Not focused businessman

This is why it’s vital for business owners to do a market research prior to starting a business so that it gets harder to lose track of what they’re doing. With a good strategy in place, you should always know what the next step is and how to approach it.

#3 Not Caring About the Customers

So many startups that fail have an excuse that their products/services were way ahead of their time. While this may be true, no one should be intentionally making products that are ahead of their time – so the real reason is actually that they didn’t care about the demands of their customers.

Not caring about customers

If there’s no need for a product on the market, then that product shouldn’t exist – it’s simple as that. Startups that do succeed always put customer demands first and that’s one of the biggest differences between the two.

#4 Poor Sales Execution

The startups that only market the products and do nothing to improve their sales process usually fail within one year since inception. Sales execution is one of the most important aspects of running any business and without it, you simply won’t be making a profit.

Everyone in your team should be focused on selling, from finding leads to converting them and finally closing the deals. If you thought that email marketing campaigns are dead, you are in for a surprise – as emails are still one of the best ways for converting leads into sales.

#5 Running Out of Money

This one’s probably the most common reason why most startups have to shut their doors. Whether it’s investing in unrealistic projects or running a business with high operating costs, the money is always the problem. It’s the fuel that keeps your company running and without it, there’s no way to succeed.

Money running out

The best advice anyone can give you is to control your finances from the get-go. Investments must be carefully considered and analyzed if they’re going to bring the money back or not. If you’re a self-employed and starting your business alone then make sure to employ some money saving tips to prevent running out of money.

#6 Wrong Targeting lead to Startups Fail

You might have the right product/service, but you’re not trying to sell it to the right people. I can’t begin to explain just how important good targeting is in today’s marketing, but so many startups fail to recognize the right audience – and ultimately dissolve because of it.

Customer targeting

This is why it’s vital that you know who you’re making your product for before you even start making it. When coming up with a new product/service, you can first decide exactly who’s going to have the use of this product and which problems it’s going to solve.

#7 Failing to Adapt During the Growth Stage

While most startup owners are keen to get to the expansion point, a fact is that most startups fail during this period because they can’t adapt. The main problem here is that startup owners don’t start to delegate responsibility quickly enough, and end up with too much to worry about – until it all comes down.

Growth adapting

Every business owner should be aware of five stages of business growth and plan ahead for what’s coming. You’ll ultimately need to adapt your strategy for every stage in order to push your business ahead.

#8 Not Having User’s Feedback

Some startups out there trying to convince their customers that they’re doing everything for them, but they still won’t listen to what the customers themselves have to say about their products/services. It’s extremely hard to know when you’re doing something wrong if you don’t communicate with your customers. Which is why you should always pay extra attention to their feedback.

User feedback

Listening to feedback won’t only give you valuable information about your products, but you’ll also be in a position to boost customer loyalty and trust towards your brand. Regardless if feedback is positive or negative, you should always communicate that you’re willing to improve in that area.

#9 Legal Issues

One of the reasons that startups fail, is that sometimes they enter a business area that’s legally complicated and can’t seem to find their way through it all.

This is why professionals like Withstand lawyers always recommend knowing all the different legal challenges you might potentially face prior to entering a new venture. If you don’t think you can handle a venture because of its legal issues then it’s probably better if you go for something else entirely.

#10 Not Knowing Your Competitors

Tracking your competition isn’t only to know what they’re up to, it’s also to find an opportunity to do something better than them. When talking about new technologies, for example, sometimes the first business that grabs onto something gets successful. But more often than not it’s the second or the third one – the ones that managed to analyze the first startup and learn from their mistakes.

Strong competitors

Gathering all sorts of information about your competitors can take you to some great solutions for your own products. In some cases, competitive startups even partner up if their products/services complement each other.


In today’s world, thousands of new startups appear every week and it’s only natural that most of them won’t succeed. Many business owners take things for granted and think that having a great idea is enough to get to the top. Some do everything right but they just get unlucky at some point.

Starting business team

This guide can by no means guarantee you that your startup will succeed if you do everything right. But we can tell you with utmost certainty that you will stand a much better chance if you avoid these mistakes.

Cate Palmer
Cate is an IT girl by day and a writer by night. Her fields of expertise could be summed up in web design and digital marketing. Her interests are, on the other hand, wide and ever-evolving. These days Cate is quite passionate about helping startups and small businesses to grow successfully. To see what she is up to next, feel free to check out her Twitter dashboard.
Cate Palmer

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