The Top 4 Reasons Startups Fail

Most Entrepreneurs Think They’re Building the Next Big thing

According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months.

But why? What can we learn from the colossal amount of failure with small business that we can apply to our own business aspirations?

We will give you 5 reasons for failure and more importantly, what you can do to avoid it happening to you:

1. Failure to find unsolved customer pain

Too many founders think that their idea is so brilliant that their best course of action is to build the product, show it to the world, and wait for the money to roll in. However, that common delusion is a major startup killer. In reality, people are reluctant to try a startup’s product, because most of them fail. So they will only try the product if it promises to solve a painful problem that nobody is trying to solve.

To avoid this problem, don’t start your company until many people are willing to pay now to get your product sooner.

2. Running out of Cash

A second major reason that startups fail is because they ran out of cash. A key job of the CEO is to understand how much cash is left and whether that will carry the company to a milestone that can lead to a successful financing, or to cash flow positive.

3. Company doesn’t have product -market fit 

Most entrepreneurs are focused on what product or service they want to bring to market. Instead, what’s critical is deeply understanding the customers and the problem or opportunity they have, and the environment in which the customers experience that problem or opportunity so they can understand how best to solve it—as well as how best to convince customers to buy the solution.

4. Team incompability, poor leadership

A final startup-killer is a leader who cannot recruit and motivate the most talented people for the jobs on which the company’s success depends. The simple reality is that if you are not a great leader, it is hard to learn to become one. Moreover, the leadership skills you need to get a company to 10 employees are different than what a 100-person or 1,000-person company requires.

According to Entrepreneur, Team Incompatibility was the second most mentioned cause of startup failure. They were surprised at how often this roadblock to success was mentioned. It’s about how the members of the founding team work together and whether they have the proper skill sets to overcome the challenges ahead.

5. Inability to nail a profitable business model with proven revenue streams.

Startups need to move swiftly without spending tons of cash to figure out their secret sauce. Using tools and methodologies such as Minimum Viable Products, Lean Marketing and Experimentation is critical.

When to hit Accelerator 

Most of accelerators first look for a revenue. We are an early-stage accelerator so we jump right in a begging. All these 8 points are very important.