ArticlesAnalyticsTop 5 Reasons Startups Fail

Top 5 Reasons Startups Fail


Running a startup is a hard and difficult task for an entrepreneur. You will face many struggles in the early months and years. If you want your startup to gain success you need to learn from others mistakes and try to avoid them in your own startup.

Here are the top five reasons why startups fail.

Lack of planning

A lot of startups do not plan for the future because they feel like their innovations and ideas are enough for them to gain success. Having a great idea will help you in the early stages in building a startup, but you need to combine your product with a well-established business plan to have constant success. This means you’ll have to make decisions about various market strategies and product directions on a daily basis, which can be time consuming.

StartUp Planning

It is also very difficult to avoid distractions when you don’t know what you’re working towards. While creating a business plan it may seem like a major task, it will guide you in the coming years. You should also take into account your marketing strategies into this business plan.

It’s crucial to have insurance to protect the business from the financial consequences of a potential mishap that could easily wipe out the assets of a Startup. Whether you sell a product or provide a service to a third party in exchange for payment, you need small business insurance to protect yourself from unforeseeable risks.

Hiring wrong management

If you’re an entrepreneur who believes in your product or service and has agreat idea what will create a successful business, then you have to understand that you’ll need to hire the right employees through out the process to ensure your business growth. However, many entrepreneurs hire the wrong people who aren’t fit for the job.

For example, some entrepreneurs will hire friends and family who don’t have any prior experience necessary to take on the challenges of that position. During the early stages of your startup, it is very important that people you hire are great for the job. If you hire the right people your company will function properly.

StartUp management

If you have never hired any employees before, there are some tips which will help you minimize any mistakes in the process and will run smoothly. For instance, you have to ask each employee why they want to join your company and how will they handle common problems that occur during workdays.

The best method to simplify the process is to have a HR team within your startup. When you hire a HR team for your startup, they will be able to handle therecruiting and training of the employees which will make your job easier.

Lack of Funding

A common money mistake for failed businesses is having insufficient operating funds. New business owners often don’t understand cash flow or underestimate how much money they will need to get the business started. As a result, they are forced to close before they have had a fair chance to succeed. They also may have an unrealistic expectation of incoming revenues from sales.

Startup Funding

If you have a great idea for a business or service and you believe it will be successful, you’ll need to market this idea to an investor for startup to grow in the coming years. While the initial means of funding is through personal investments, friends and family, you will need to find external funding.

The first type of external funding you should seek for your startup is an angel investor. These investors are typically looking to get into the new and exciting startups at early stages. Another type of funding you can considers for a startup is venture capitalist and small business grants.

Expanding too quickly

Doesn’t matter the industry you work in, sometimes it’s difficult to understand when it’s time for you to expand. The most common reasons that start-ups fail to find success is because they expand too quickly when they aren’t actually ready for the demands that come with expansion. This ties back to a lack of planning.

When a start-up creates a detailed business plan, they will have a good understanding of the required steps that need to be taken when trying to gain success. Without a business plan, you’ll find it difficult to know when the time is right for expansion, which can easily cause you to expand far too quickly.


When you expand your start-up too fast, you won’t maintain every other aspect of the company. This will likely prove to be a problem as time goes by and will worsen your reputation among your customers.

Some of the dangers of growing your business too fast include making mistakes with your cash flow, hiring the wrong employees, not properly scaling customer service, and making management mistakes.

Expand only when you have the resources, time, and experience necessary to do so without many bumps in the road.

Lose Focus

Numerous start-ups will fail to find success because they aren’t customer-centric with their approach to running a business. If you want constant success, you should show your customers that they are important to your business. For example, do you provide good customer service to your main customers? If you can’t easily answer this question, you likely aren’t doing enough to provide assistance to your customers.

If you run a social media page on Facebook, a great way to show your customers that they are important is by engaging with them in the comment sections and by answering the questions and problems that they might have.

If you have a website, make sure that your customers can reach you and you respond quickly. You website should also be fast and mobile responsive. You can opt to host your website on a local server. So say, your business is based in Canada, you can check Hosting Foundry’s best hosting list for Canadian audiences.

If you’re loyal to your customers, they will be loyal to you. Without taking the necessary steps to make your business customer-centric, it’s likely that your success will be short lived.


If you’re interested in building a start-up business, it’s critical that you know the top 5reasons why start-ups fail to reach success. After you fully understand the reasons, you should hopefully know what to look for as you navigate your company to success, thus making your chances at success much greater.

No business will thrive if they don’t know what to do when they encounter a problem in their path, this is why you need to have the best information on hand before you start.

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