6 Reasons Start-ups Fail and How to Avoid Them

Here’s an unappealing fact: According to recent research, roughly 90% of start-ups fail over time:

In the first year, 21.5% of start-ups fail; in the second year, 30% fail; in the fifth year, half of them fail, and 70% of businesses fail by the tenth year.

It doesn’t matter whether the start-up is a household name like WeWork or MoviePass, or if it is so small that no one outside of a tiny and specific niche has ever heard of it. Start-ups, in general, are more likely to fail.

The good news is that we know why these businesses fail, and we can learn from these start-up failures.

Six reasons that start-ups fail and ways to avoid them

The following problems may harm your start-up, so avoid them. These are:

  1. Unavailability of long-term funds

Most start-up owners have funds at the start but run out of funds after a while. This is due to overspending on bad ideas, failing to generate sales, and needing more investors.

How to resolve this

  • You can avoid this by doing the following:
  • Take money from family and friends.
  • Take out loans to fund your start-up.
  • Crowdfunding your business


  1. Failure to identify unresolved customer pain points

Too many founders believe that their idea is so brilliant that the best thing they can do is build the product, show it to the world, and wait for the money to come in.

That common misconception, however, is a significant start-up killer. People are hesitant to try a start-up’s product because most fail. As a result, they will only try the product if it promises to solve a painful problem that no one is currently attempting to solve.

How to resolve this:

To avoid this issue, wait until many people are willing to pay now to get your product sooner.

  1. Business plan flaws

A business plan is Startup 101, and almost everyone knows you need one in the early stages of any small business. However, it may be better if you have a business plan.

A good

business plan needs to consider factors that will become important later, and this can lead to business failure rather than start-up success.

As previously stated, some common business plan flaws include needing to be more specific, miscalculating costs, underestimating production or marketing timelines, and getting key facts wrong when researching the market.

How to resolve this:

To write a successful business plan, you don’t have to go to Harvard Business School, but it does help to get help from people with real-world experience who can point out flaws so you can fix them sooner rather than later.

6 Reasons Start-ups Fail and How to Avoid Them

  1. Poor teamwork and leadership

A final startup-killer is a leader who cannot recruit and motivate the most talented people for the jobs critical to the company’s success. The simple truth is that it is challenging to learn to be one if you are not a great leader. Furthermore, the leadership skills required to grow a company to 10 employees differ from those required to grow a company to 100 or 1,000 employees.

How to resolve this:

A great leader has the charisma and tracks record to create a compelling vision for the company and recruit top talent to realise that vision at the start-up stage.

Starting a business is complex; if you can navigate these issues, yours will surely succeed.

  1. Reticence to solicit feedback on prototypes

Many entrepreneurs will only let people see their product once it is perfect. There are many reasons why they do this: they are afraid that someone else will steal their idea, so they want to get a head start, they want to impress their peers, or they are afraid that unless it is perfect, no one will want to buy it. A start-up’s failure to solicit feedback from potential customers is usually fatal.

How to resolve this:

Avoid this issue by creating a low-cost prototype of your product, soliciting feedback on it, and then using that feedback to create a new one. This learning cycle should be repeated until potential customers demand your product.

  1. Failure to evolve your start-ups over time

A common issue with most start-ups is that they do well in their early stages. However, due to a lack of development, they eventually fail. This is quite simple to grasp. If you successfully get your start-up up and running, your orders will increase sooner rather than later, and you will require more workers to manage those orders.

Furthermore, some start-ups keep the same items for an extended period. They need to improve the design, which causes buyers to lose interest and the start-up to fail.

How to resolve this:

Fortunately, you can easily avoid this issue. All you have to do is put some money aside each month to ensure that you can invest in your new business.

Bring in new labour as needed, work on new model designs for your products, try to collaborate with your planning team, and occasionally come up with new items.

Wrapping it up!

Failure is the last thing we consider…

or at least the last thing we want to consider. However, failure must be considered when knowing what not to do. We all learn from our own mistakes as entrepreneurs, but we can also learn from the mistakes of others.

That’s why I’ve compiled a list of six reasons start-ups fail to save us the trouble of making mistakes ourselves and instead knowing what to do or avoid the first time around.

The path to start-up success takes time and effort. It can be a difficult battle, but you can arm yourself and prepare for the fight ahead. Proper business planning, market research, and assembling the right team are all critical components to your success.

Knowing the top reasons for start-up failure will help you future-proof your start-up and maximise its potential.