5 Reasons Your Startup is Bound to Fail

BY Onibalusi Oct. 21, 2010 30 Comments

Starting a business is only half the game, what happens to the business after it is started is of more importance. There are many reasons why startups fail and some can be corrected and some can’t. Whether you have a startup that isn’t going as you want it to or you are about to start one, this post will explain 5 reasons many startups fail.

1. No Proper Research

The #1 reason why most startups fail is the lack of proper research. Many entrepreneurs start a business without a faint idea of their audience and they think a business can succeed based on estimates. It is very important to conduct proper research before you start your business because this will make sure you understand your business and what exactly you’re getting into.

2. No Proper Funding

Another costly mistake many people make when starting a business is not having a proper funding plan for their business. Your business needs funds to grow, you have to buy new things, you have to employ staff and you have to keep improving your business. Over 80% of your business problems have to do with money and it can be very detrimental to start a business without having proper funding.

3. No Marketing Plan

If you’re starting your business without having any marketing plan/strategies in place you should know that you are digging the grave of your business. Every startup must have a marketing plan and if possible you should hire a professional.

4. No Customer Concern

A lot of business failures started with a mistake in the customer service aspect of a business. Don’t just think what matters most to the success of your business is your innovative idea and proper marketing, having a great concern for your customers is of utmost importance.

The best business can be the worst with poor customer support and the worst business can be the best with great customer support. Have a better understanding of your customers, let them know you care about them and you’ll be amazed to see how great your business will go.

5. No Vision

This is a very deadly mistake most people make and it might cost you millions of dollars before you know it. It is very important to know where you’re going before you ever start your business as this will be a drive towards achieving your goals.

Many startups fail because they don’t know where they are going so they easily get distracted. If you know where you are going and how to go about it, there is no other choice you have than to succeed.

Conclusion

Some mistakes cannot be avoided and some can, the above are 5 deadly mistakes that makes your startup bound to fail. Take a look at your business and see what you’re doing wrong, make a change before it is too late.

Why do you think startups fail? Do you have a startup that failed?

Entrepreneurship, Launching Tips

failure, startup

http://thestartupstudent.com Zack Shapiro

What’s important to remember is that these things are all salvageable throughout the life of a startup. The sooner you do these, the better. It definitely pays off to do your homework.

ZS
http://thestartupstudent.com

http://www.youngprepro.com Onibalusi Bamidele

Exactly Zack,

The sooner the better.

Many startups won’t even live to make a correction so it is very important to do something now.

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http://www.lavenderuses.com Patricia@lavenderuses

Hi Oni
I know for my startup I did research on my niche and also on the competition to see if I had a viable business idea. A lot of businesses fail for the reasons you discuss here. Another helpful post. thanks.
Patricia Perth Australia

http://www.youngprepro.com Onibalusi Bamidele

Exactly Patricia,

Research is very important to the success of a startup.

Thanks so much for commenting!

http://www.thesaleslion.com Marcus Sheridan, The Sales Lion

Good stuff Onibalusi….Having gone through 3 start-ups now I’d add a couple of reasons why people fail….

1. They aren’t truly passionate about their product or service. In other words, they’re just in it for the money.

2. They have their hand in too many cookie-jars. In other words, they lack focus because they are trying 3 start ups at once or have 2 other important ventures, etc..

3. They don’t build a content marketing base and brand first. This one is key. It allows a business to have momentum as soon as the race starts.

4. They have no mentors….Dang mentors are great!!…no need to reinvent the wheel if it already works.

Just my two cents

http://www.youngprepro.com/subscribe Onibalusi

Awesome Marcus,

It’s great to hear your view and your points are spot-on.

Having passion for your business is really important to its success.

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mike jones

I don’t think the five reasons, above is the main reasons startups fail. You can have good marketing, funding, vision, done good research and have good customer service and still fail..

Why..lack of support, people need mentorship and to have support from like minded business people that will help bring your business forward.

http://www.youngprepro.com/subscribe Onibalusi

Hi Mike,

Yeah! These are not teh reasons but a lot of startup failure has to do with these.

What do you think?

Mike

Hi

I know of at least two startup companies, they both had business plans, the vision, there was a market for there business, they struggled to get funding to start the business…the funny thing is they did not need funding to start of with. They had that old mentality that you have to borrow money to get started in business.

They both had know experience in running a business and were looking for support or mentorship from people or other businesses who has started a simlimar business to them successfully.

http://blog.betterbottomline.com Scott Gregory

I would like to add this to the list…

Poor (and/or non-existent) accounting and bookkeeping practices.

Countless businesses fail because they haven’t a clue what a profit and loss report is, how to read it, or how to manage it.

Many businesses fall into the “if I can write a check I can do my own bookkeeping trap” and never recover.

http://www.youngprepro.com/subscribe Onibalusi

Exactly Scott,

Record keeping is also very important and lack of solid record keeping can make a business go bankrupt.

I’m glad you loved the post!

Anne

All the 5 reasons are among the list of hy start up business fail. So far, I have 1 start up business who failed and I think the reason of it is lack of passion to what I am offering to my clients. I only made that business for the sake of income. Well, a businessman must have the passion and hard work in order to succeed in his chosen business.

http://www.youngprepro.com/subscribe Onibalusi

Having passion for your business is really important because it is what makes you keep going in the hard times.

I’m glad you loved the post.

http://experimentsinpassiveincome.com Moon Hussain

I can’t stress the importance of researching… and looking at data more than just once. Another thing I hate is when there is no customer service (or I should say good customer service).

Good read.

http://www.youngprepro.com/subscribe Onibalusi

Hi Moon,

Having a good customer service is a very important aspect of a business.

I’m glad you loved the post.

http://www.dennisedell.com/about Dennis Edell @ Direct Sales Marketing

I’d say #1 basically covers 2-4 all in one.

No vision is interesting though, and you’re quite right.

Many start-ups think only of the start up itself, then they’re 6-12 months into it and wondering what to do next

http://www.youngprepro.com/subscribe Onibalusi

Hi Dennis,

Great! I’m glad you loved the post.

http://www.tekkaus.com tekkaus

How about no proper long-term planning that will ensure your startup will be sustainable.

http://www.youngprepro.com/subscribe Onibalusi

Exactly Tekkaus,

Having a proper long-term plan for your business is really important.

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http://www.csb-76.com Cassy

These are all very good reasons. I have never ran a business before and this will really help with my decisions. I hope that everyone does their homework before they jump in.

http://www.youngprepro.com/subscribe Onibalusi

Awesome Cassy,

I’m glad you loved the post.

http://www.lifevisioncoaching.co.uk/ Bill @ Christian Life Coach Training

@ONIBALUSI great post my friend. As well as these 5 reasons your startup is bound to fail is because you may have not done enough market research on your customer wants and needs. Another reason could be you may not had enough profit to survive in the market, what most business entrepreneurs who have started a business newly forget is growth, survival and profit are the 3 most important factors. I believe you need to know what your competitors are doing, therefore you could do something ‘UNIQUE’ to do better than your competitors in pricing etc…
http://www.cuisinartmcp-12.com Anna

I am sure that we are all guilty of one or all of these danger spots. The only way to learn them is to go through them. It is nice of you to identify the problem spots for any new person getting into business. I hope they will listen to what you have to say because it will save them a lot of learning time.
http://www.glosonblog.com Gloson

Hi Onibalusi!

Great post! Yes, I agree. Researching and planning are indeed very important. Without those, your startup would be like a boat without a destination.

Cheers!
Gloson
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http://www.davida-yemi-akanle.com Davida Yemi-Akanle

I totally agree with you ONI. A business built on solid research, with a great marketing strategy has a greater chance of succeeding.

Thanks for sharing.
http://www.irelandsfarmcottages.com karen@ Holiday Cottages Warwickshire

I totally agree with all this what a fantastic post, How can a business work when no thought has been put into the planning side. So many different things require planning and implemening ideas to organise. Mission statements need huge though as well as objectives etc.