Smart Investment
Small Enterprise|August 2019
Smart Investment
Sumaiya Khan
Smart Investment

Why Do Most Startups Fail?

Most startups run into troubled waters during their first year or mostly by the second year of establishment. What could be the reason behind such a large number of failed ideas? There are numerous reasons that either ‘click’ or ‘kick’ the success of a startup and their ideas. For an establishment to penetrate into the market, a lot of research, planning and deep understanding of the business is a prerequisite. To be a success in the competitive market, be it a monopoly or perfec competition, requires a lot of intrepidity. Here is the list of bullets, that not only make startups bleed but ultimately succumb to their deadly end. These factors can be divided broadly into two

Internal Factors

External Factors

Internal Factors

Absence or erroneous business plan-

One of the major reasons for the failure of start-ups is either absence of business plan or faulty business plan. Either way, it is suicidal. Majority failed start-ups have no idea about the market, competition, customer’s preferences and supply chain management. Start-ups assume that their ideas are brilliant and will attract customers automatically. Start-ups fail to figure out how they will reach their customers? How they will maintain the inflow of the customers? What will be the cost of gaining these customers? What is plan B if product A fails? How will the start-up survive the competition?

Everything served at once

With the ambition of becoming an overnight success, few start-ups do too many things, too early. They produce, invest and offer all their ideas or products to the market, all at once. Without setting their foot firmly in the market, they go ahead with scaling up of their businesses. This is when the bottom falls out for these start-ups.

This story is from the August 2019 edition of Small Enterprise.

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This story is from the August 2019 edition of Small Enterprise.

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