Saturday, 26 May 2018

Why do most startups fail?

"Talent wins games, but teamwork and intelligence wins championships." - Michael Jordan

Every state of affairs – start-up failure, start-up success, illness, health, hate, love, war, peace – has an immediate cause. And that cause has an immediate cause. And that cause has an immediate cause.
It ends at the leaf but it starts at the tip of the root.

One major reason why start-ups fail is that the leader(s) of the start-up and the people working for them are not doing what they are passionate about. Some other reasons include:
  • Failure to find unsolved customer pain
Too many founders think that their idea is so brilliant that their best course of action is to build the product, show it to the world, and wait for the money to roll in. However, that common delusion is a major startup killer
  •  Reluctance to get feedback on prototypes
Plenty of founders refuse to let anyone see their product until it is perfect. There are plenty of reasons they make this mistake - they are afraid someone else will steal their idea so they want to get a big head start, they want to impress their peers, or they are afraid that unless it's perfect nobody will want to buy it. Failing to get feedback from potential customers is usually fatal to a startup.
  • No passion for the market
It is not possible to work that hard and be effective unless you believe that your life's mission is to make potential customers better off by providing them your company's product.
  • Lack of skills needed to win
Another big reason that startups fail is that the founders can't do the thing that it needs most to get off the ground. More generally, entrepreneurs boost their odds of success if they pick industries that value the skills at which they excel and love to practice.
  •  Ignoring cash burn
Many entrepreneurs want to build a perfect product and then dazzle the world with their brilliance. They eagerly read about how easy it has been for other startups to raise millions of dollars and think that they will be able to do the same. So they ignore the rate at which they are burning through cash, and assume that when the day comes to replenish their cash coffers, investors will break down the doors to write checks.
  •  Inability to raise capital
Even if an entrepreneur realizes that cash will run out, too often he starts the process too late, goes after the wrong group of potential investors, and does not present them information about the company that leads them to want to invest.
  • Weak team, poor leadership
At the startup stage, a great leader should have the charisma and track record to conjure up a compelling vision for the company and recruit top talent to come along for the ride of realizing that vision. Starting up is hard to do and if one can't navigate one’s venture around these problems.

- Bhavya Bhatia

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