5 Reasons Why Startups Are Failing

Over the past couple of years, the most popular world to be occupying the business world, especially in tech is “Startup.” Even economics sections of daily newspapers and magazines have been filled with news of start up culture.

Startup-failure-rate-infogrraphic

In the Mecca of Startups, Begaluru, India, the buzzword has been quite casual and an every day phrase – a symbol of popular culture. From businesses like Uber, Dropbox and local Startups like MuSigma and Flipkart, it is about time that the entire world gears up for a turnaround in the type of businesses that we run.

Even though Indian Startup companies are likely to have received almost $5 billion in funding from investors by the end of the year, many Startup companies fail to make a mark – often dying after a brief period of popularity. I want to take a stab at why this is happening.

  1. Rushing to Fail – instead of creating a feasibly strategy and term based goals, many founders and mentors just want to create visibility in the market. That is all that matters since investors are lining up to provide considerable monetary assistance without taking much contemplation.
  2. Lacking Vision – Time tuned goals, well-knitted strategies and clear vision will always reign. The serious issue with Startups is that the focus is often on business operation and the creation of the product. This takes away the attention from holistic and proven aspects of running a business.
  3. Not Thinking Analytically – You have to realize that the world runs on statistics and numbers. Somehow, Startups fail to use even free resources to analyze market data. They can even use some of their investment money to pay for great resources to do it for them. In some ways, spreadsheets are more important than any programming language.
  4. Inefficient Cost Control – Startups have to preserve the investors’ money and use it optimally because ultimately, if you run out of money before you turn profits, you’re done and that is why most Startups fail. Throwing people big pay packages and acquiring office space in prominent business parks should be avoided especially if the budget doesn’t permit it.
  5. – Most Startup founders are pretty young (especially in India) with little to no experience. Thus, they hire domain experts to manage their business operations. However, business leaders have to constantly interact with their employees and allow them to contribute ideas based on their experience. I don’t think that Startups fully tap into the potential skills and knowledge banks of their employees.

What do you think of this list? Let me know what reasons you see being a huge factor in Startup failure.

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