The main reasons 90% of startups fail

Why do 90% of startups fail?

Many studies that deal with the causes of failure of most entrepreneurs focus on factors related to the product, the studies and the market, which are the reasons for failure after the establishment of the company. But I think there are reasons for failure prior to establishing the company.

Why do 90% of startups fail?

Many studies dealing with the causes of failure of most entrepreneurs focus on factors related to the product, studies and the market, which are the reasons for failure after the establishment of the company. But I think there are reasons for failure prior to establishing the company.

The most important reasons for the failure of startups before incorporation

The first reasons why startups fail are their founders, their motivations and perceptions

Many entrepreneurs claim that they are driven by passion and a desire to change the world around them, chanting slogans that have become repeated until they have become clichés such as "follow your dream" and "seek a better world." While it may be true in some cases, what drives many of them is the dream of wealth and fame. There is nothing wrong with the pursuit of fortune and fame except that it is not enough. The biggest problem is their perception and expectation at the first turn, especially since successful experiences have proven that successful entrepreneurs - except for what is rare - have passed through many failure stories from which they learned a lot, and without these experiences they would not have been able to formulate their project in the final form that we know. Only passion can propel you forward while all the circumstances around advise the opposite.

Confusion between the concepts of entrepreneurship and self-employment

Joining this global tendency is often an escape from routine job conditions. You find someone who calls himself an entrepreneur who sees in this concept a wonderland that will save him from the boss’s bullying and long working hours, to be surprised later that the manager sheds less weight than the intense competition in The labor market and that entrepreneurship does not distinguish between office hours and does not leave space for personal life, at least in the early years. Many entrepreneurs also start their businesses because they need a job. They have a vague idea of ​​what they're doing, without business skills and real experience to find failure waiting for them.

The common belief is that all you need to start a company is a creative new idea

Although talking about entrepreneurial success stories always begins with the moment when everything started with the inspiration of carrying an idea, the idea is not that important in itself, as any idea is rarely unique in reality. Implementing that idea is the final word that set a sportswear brand like GymShark apart from other emerging ventures. What is so special about another sportswear and equipment company?

You have to present more than just an idea. To start a successful company, you have to give it time, money and skill.

The most important reasons for the failure of startups after incorporation

The market does not need the product

Fortune has identified the main reason why startups fail: "They make products that no one wants." The study showed that 42% of startups fail because entrepreneurs do not study market requirements. The first step you should take when you have an idea for a new product is to study the market need for that product. Instead of working for months on developing a product that no one wants, focus on solving a problem of interest to other people. Put your ideas on the business model board, go and test them. Talk to your potential users. Most of those who fail do not allocate enough time to conduct proper research and study the market.

29% of startups fail due to funding cuts

If you are short of money, start looking for a financing method that works for you. Searching for funding for your own project may be a great challenge for entrepreneurs, so you must provide a detailed financial study for your project and prove your ability to implement the project in an ideal way so that you get the appropriate financial support. You can turn to crowdfunding, support funds and loans for small projects, financing from family and friends, venture capital and incubators. Do not leave your daily work until your project starts generating money for you, as life pressures may push you to abandon your dream.

23% of startups fail because of the absence of the right team

“People don't build great companies, teams do.” Mark Suster.

Statistics show that startups with more than one founder have a higher chance of success. Most entrepreneurs know their craft and a few other things. If you lack a particular set of skills, find the team that can complement your skills. Do what you master and hire experts to do the other things. This may cost you more money, but if done right, you will get much more than you spend.

19% of startups fail because of competition

"Focus on yourself and do not pay attention to the competition" sounds like good advice if you are looking for inner peace. But if you are establishing a company and want your company to continue, then it is foolish for entrepreneurs not to care about competition. Neglect of competition eliminated a giant company like Kodak, which invented the first digital camera in 1975, but it believed that the masses would not be tempted by advanced technology to cost them their lives and declare bankruptcy in 2012. If Kodak was not safe from competition, ignore the competition is a luxury not Startups can afford it.

Rapid growth

This may sound strange and inconsequential, but I will confuse it. While rapid growth is the first evidence of the greatness of your idea and the success of your organization, growth is faster than expected and planned. It could be a reason for the failure of the newborn company. You are required to validate your business model before scaling it. Without proper preparation and strategic focus, rapid growth does not necessarily imply profitability. Along with rapid growth comes additional overhead costs, more employees, more infrastructure and more everything. Just like what happened in The Intern, the rapid growth of Jules Austen's "Anne Hathaway" seemed to be spinning out of control. Which prompted her to search for a new CEO to share responsibilities with him. In addition, the increase in its market share imposed on it a new strategic line that is consistent with the increasing speed of growth and the new situation.

At any stage of growth, verify that the growth is sustainable and you can really keep up with it. Otherwise, you just got bigger and less efficient.

It's really cool to have a vision for the future and a dream to pursue and pursue. Therefore, arm yourself with all the necessary tools to protect your dream and make it a reality, and be patient, it is not like a Hollywood movie. Success in establishing a private project took Oprah, which had financial resources, a large audience base and huge contacts and knowledge, a few years to reach its works to solid success, it must be Be prepared to be patient and keep that long as well. Watching films about entrepreneurship and reading their success stories can help you hone your motivation and follow the path when you face pitfalls.